Wednesday, September 1, 2010
Jakarta Composite Index, Rupiah Surge as Inflation, Economic Data Please Investors
Source: Jakarta Globe


Jakarta. The Jakarta Composite Index posted its biggest gain in four weeks on Wednesday after the August inflation rate came in below expectations, leaving the central bank time to hold its benchmark interest rate steady to promote economic growth.

Better-than-expected economic data from China and Australia also contributed to the positive sentiment.

The JCI rose 53.43 points, or 1.7 percent, to close at 3,135.37.

About 5.2 billion shares worth Rp 4.8 trillion changed hands. Gainers outnumbered decliners 139 to 59.

"The lower-than-expected inflation triggered investors to buy up interest-sensitive stocks like banking stocks and consumer goods stocks," said Janson Nasrial, an analyst of Amcapital Indonesia.

"I am confident the JCI will hit 3,300 by the end of this year because inflation is still considered manageable, and our economic fundamentals are strong."

The Central Statistics Agency reported that year-over-year inflation was 6.4 percent in August, below economists' expectations of 6.7 percent.

Meanwhile, China's manufacturing expanded at a faster pace in August and Australia's economy grew faster than expected.

"Faster growth in Australia's economy and China's manufacturing are likely to support risk-taking sentiment," said Yuji Saito, director of the foreign exchange department at Credit Agricole Corporate and Investment Bank in Tokyo.

On the Jakarta bourse, finance stocks rose. Bank Mandiri, the country's biggest lender by assets, increased 1.7 percent.

Mortgage provider Bank Tabungan Negara climbed 2.2 percent.

Its finance director, Saut Pardede, said the company planned to sell Rp 1.5 trillion to Rp 2 trillion of bonds in the second quarter of next year to expand and improve the funding structure. He said lending could grow 27 percent in 2011.

Indofood Sukses Makmur, the nation's biggest maker of instant noodles, slid 1.1 percent, while Unilever Indonesia advanced 0.9 percent.

Telekomunikasi Indonesia, the country's biggest telecommunications provider, jumped 4.1 percent, its first gain in four days.

The rise followed a report by the Boston Consulting Group that the number of Internet users in Brazil, Russia, India, China and Indonesia would double to 1.2 billion by 2015, fueling growth at media companies and phone carriers.

Semen Gresik, the nation's biggest cement-maker, increased 1.2 percent to Rp 8,800, the steepest climb since Aug. 19.

The stock was rated "buy" by BNP Paribas analyst Helmy Kristanto, who said the company would likely be the "main beneficiary" of growing development on Indonesia's outer islands. Kristanto has a 12-month share-price estimate of Rp 10,150 for the stock.

The rupiah advanced the most in nearly three weeks on speculation the central bank will tolerate appreciation to curb the cost of imported goods, and on optimism overseas investors will buy more of the nation's assets as trade with the rest of the world grows.

The rupiah climbed 0.4 percent to 9,000 per dollar. The currency strengthened as much as 0.6 percent, the most since Aug. 13.

The rupiah has risen 4.2 percent this year, the third-best performance among Asia's most-traded currencies, excluding the yen.

"The key story here is inflation," said Enrico Tanuwidjaja, an economist at OSK-DMG Group in Singapore. "Bank Indonesia doesn't target any specific level for the rupiah, but continues to monitor volatility, which means excessive losses and gains are unlikely."