Indonesian shares end high as Indosat leads blue chip gains

Indonesian shares end high as Indosat leads blue chip gains

Dow Jones, Jakarta

Indonesian shares ended higher on Wednesday on buying in most blue chips, helped by gains in several regional markets following a widely expected interest rate hike in the U.S., dealers said.

"Buying occurred across the blue-chip board," said a trader with a foreign securities firm.

Dealers said, however, that gains were limited by expectations that the central bank may further raise interest rates in step with the recent U.S. hike.

The Jakarta Stock Exchange composite index ended up 11.504 points, or 1.5 percent, at 763.947.

Gainers led decliners 94 to 36, with 74 stocks unchanged.

Volume was 730 million shares valued at Rp 887 billion ($1=Rp 9,255).

Indonesian Satellite Corp. was among the day's leading gainers, helped by news it will replace its president, Widya Purnama, next month. Management changes are expected to further boost the company's performance. Indosat jumped Rp 225, or 5.6 percent, to close at Rp 4,275.

Index heavyweight Telekomunikasi Indonesia rose Rp 150, or 2 percent, to Rp 7,700 on a rebound.

Also higher were shares of gasoil company Medco Energi, which rose Rp 275, or 22 percent, to Rp 1,575, on reports that Indian Oil Co. may buy a 40 percent stake in Medco for US$600 million.

Dealers said they expect the market on Thursday to trade higher on a further rebound in select blue chips.

Meanwhile, the rupiah closed lower Wednesday as bullish dollar sentiment, fueled by an interest rate hike, added to pressure on the Indonesian currency.

The dollar closed at Rp 9,255 up from its close on Tuesday at Rp 9,200 but down from its intraday high of Rp 9,270.

The rupiah weakened on Tuesday when banks started to adjust their currency positions ahead of a ruling requiring them to bring down their on-balance sheet foreign exchange net open position to at most 20 percent of their capital by Sept. 2.

The rule has been causing some confusion in the local currency market. The position adjustment led to a slide in the rupiah's forward rates, which has turned mixed on Wednesday. The overnight forward rate was steady at 0.0-0.2 point after falling on Tuesday from 0.5-1.0 point on Monday, while the one-week swap has recovered back to 4.0-6.0 points, after falling to 1.0-3.0 points on Tuesday, dealers said.

For the near term, the prospect of further U.S. rate hikes and political uncertainties ahead of the Indonesian presidential runoff election in September will keep the mood on the rupiah cautious, dealers said.

For on Thursday, though, the dollar is expected to trade between Rp 9,220 and Rp 9,270.