Indonesian shares end down on news of fuel price hike plan
Indonesian shares end down on news of fuel price hike plan
Dow Jones, Jakarta
Indonesian shares ended lower Thursday, hurt by news that the government plans a single, sharp increase in fuel prices early next year, dealers said.
Sri Mulyani Indrawati, minister for national development planning, told the Asian Wall Street Journal that the price increase would probably occur between early February and April, when Indonesia's seasonal inflation pressures are low because of agricultural harvesting.
But analysts said higher fuel prices could exacerbate inflation and hurt companies.
Dealers also attributed selling to worries that the central bank may further lift interest rates to stem rising inflation.
"These negative factors are a good excuse for mid-term investors to take profits," said an analyst with Kuo Capital Securities. The main index has risen around 38 percent since the start of the year.
The Jakarta Stock Exchange Composite Index ended down 15.423 points, or 1.6 percent, at 963.797.
Decliners led gainers 113 to 31, with 74 stocks unchanged.
Volume was 1.75 billion shares valued at Rp 1.5 trillion, compared with 3.9 billion shares valued at Rp 2.8 trillion Wednesday.
Bellwether Telekomunikasi Indonesia led the decliners, falling 3 percent to Rp 4,900 and its rival Indosat ended down 1.7 percent, at Rp 5,750.
Dealers said concerns about higher interest rates spurred investors to continue to sell bank stocks.
The central bank Wednesday raised the interest rate on its benchmark one-month Bank Indonesia notes to 7.43 percent from 7.41 percent. Higher interest rates could raise banks' interest costs and hurt their overall financial performance, analysts said.
Bank Danamon fell 3.4 percent to Rp 4,225, Bank Mandiri dropped 2.6 percent to Rp 1,900 and Bank Negara lost 1.6 percent to Rp 1,525.
Dealers said they expect the market to trade lower Friday.
Meanwhile, the rupiah ended higher, as investors consolidated their positions after a recent sharp rise in the dollar, dealers said.
The dollar ended at Rp 9,150, down from its close at Rp 9,195 Wednesday, an 11-week high.
"Many players consolidated their positions after the dollar entered an overbought area," said a trader with a foreign bank.
The dollar hit an intraday high of Rp 9,208.
He said foreign investors, mostly from Singapore, also sold the dollar to realize profits after its rally Wednesday.
Dealers said growing demand for the greenback from local importers for bill payments, however, put a brake on the rupiah's rise.
They expect the dollar to trade between Rp 9,125 and Rp 9,175 Friday.