Blue chips push shares down

Blue chips push shares down

Dow Jones, Jakarta

Shares ended lower on Tuesday led by telecom and consumer blue chips amid security concerns ahead of the presidential run-off in September, dealers said.

"Selling occurred almost across the blue-chip board," said a trader with BNI Securities.

The Jakarta Stock Exchange Composite index ended down 10.505 points, or 1.4 percent, at 738.866, off an intraday low of 731.055. Decliners led gainers 84 to 17, with 90 stocks unchanged. Volume was 1.2 billion shares valued at Rp 507 billion.

Leading decliners were Index heavyweight Telkom and consumer goods producer Unilever Indonesia.

Telkom fell Rp 250, or 3.3 percent, to Rp 7,400 on profit- taking after the company Monday closed registration for its 2003 dividend of Rp 302 a share.

Unilever dropped Rp 150, or 4.2 percent, to Rp 3,400 on talk the company plans to issue rights shares.

Also lower were shares of cigarette maker Gudang Garam, down Rp 350, or 2.7 percent, at Rp 12,750 on expectations the company will book lower full-year earnings this year due to rising clove prices.

Cement maker Semen Gresik bucked the trend, gaining Rp 100, or 1.3 percent, to Rp 9,850 on expectations the company will complete its 2002 and 2003 financial audit by October.

Dealers expect the market to trade lower Wednesday on further selling in select blue chips.

Meanwhile, the rupiah closed slightly lower Tuesday as local companies continued to buy dollars to pay offshore debts maturing at the end of the month.

A government bond auction in the local market helped the local currency to reduce its losses, dealers said.

The dollar finished at Rp 9,275, up from its close of 9,265 Monday.

Local companies are saddled with offshore borrowings estimated at $60 billion. Payment of maturing debts frequently dogs the local currency.

"Demand for the dollar was quite healthy as local companies bought the unit almost at the same time," said a dealer with a foreign bank in Jakarta.

The dollar touched an intraday high of 9,310 earlier in the day but selloffs from foreign market participants late afternoon cut its gains.

Dealers said offshore investors likely sold the U.S. unit to settle their purchases of government bonds in an auction Tuesday.

The government issued Rp 3 trillion in 10-year bonds in the auction, with weighted average yield of 11.74 percent.

Dealers said Bank Indonesia is also suspected to have sold dollars via state banks to defend the local unit.

"We are always ready to intervene if necessary," Bank Indonesia's Deputy Governor Aslim Tadjuddin told Dow Jones Newswires. But he declined to confirm if the central bank actually sold dollars Tuesday.

Dealers expect the central bank to remain in the market at least for the rest of the week as dollar demand from local companies is not expected to evaporate as yet.

They expect the dollar to trade between 9,250 and 9,300 Wednesday.