Indonesian stocks up as Pertamina puts prices down
Indonesian stocks up as Pertamina puts prices down
Naila Firdausi, Bloomberg/Jakarta
Indonesia's key stock index had its biggest jump in seven weeks after state oil and gas company PT Pertamina signaled it may cut fuel prices for industrial users, reducing costs at companies such as PT International Nickel Indonesia.
"Lower fuel prices at companies will help earnings," said Fendi Susiyanto, who helps manage the equivalent of US$99 million at PT Bank Permata. Investors "are now more optimistic about economic prospects."
The Jakarta Composite Index jumped 21.70, or 2.1 percent, to 1054.99 at the 4 p.m. local time close, the biggest advance since a 3 percent surge on Sept. 30. The measure rose 2.5 percent this week. The benchmark on Friday had the biggest fluctuation among equity markets included in global benchmarks.
Pertamina may cut fuel prices for industrial users next month because oil prices have declined, Achmad Faisal, the company's head of marketing, said on Friday. Oil slid 2.7 percent to $56.34 a barrel in New York on Thursday, the lowest close since June 15. Futures were recently at $56.35 in after-hours trading.
International Nickel, a unit of Canada's Inco Ltd., surged Rp 550, or 4.6 percent, to Rp 12,400, its biggest gain since Aug. 30, on optimism the cost of extracting the metal will fall. PT Semen Gresik, Indonesia's biggest cement maker, rose Rp 500, or 2.6 percent, to Rp 19,650. Energy accounts for about a third of Indonesian cement makers' production costs.
PT Astra International, Indonesia's biggest auto distributor, climbed Rp 350, or 4 percent, to Rp 9,050.
"Lower global oil prices also mean it's unlikely the government will raise fuel prices again next year and that's good for auto retailers," said Permata's Susiyanto.
The government on Oct. 1 more than doubled, on average, fuel prices sold to retail users to prevent oil subsidies draining the nation's coffers. The Jakarta Composite Index dropped 4.3 percent since then to Thursday on concern fuel costs would damp consumer spending. Consumption accounts for about two-thirds of the country's economy.
Pertamina on Nov. 1 raised the price of kerosene, automotive diesel, marine diesel and fuel oil sold to miners, exporters and oil companies for the sixth time in nine months.
PT Telekomunikasi Indonesia (Telkom), Indonesia's biggest telephone company, added Rp 100, or 2 percent, to Rp 5,150. PT Gudang Garam, the biggest cigarette maker, gained Rp 350, or 3.4 percent, to Rp 10,700.
Elsewhere, PT Bank Rakyat Indonesia (BRI) led lenders higher on expectations inflation will slow, boosting optimism of lower interest rates next year. BRI, Indonesia's fourth-largest lender, added Rp 100, or 3.8 percent, to Rp 2,725, the highest close since Sept. 13. PT Bank Mandiri, the largest, gained Rp 40, or 3.5 percent, to Rp 1,180.
BRI slid 9.3 percent last month while Mandiri dropped 9 percent on concern higher interest rates would damp loan demand. The Jakarta Composite declined 1.2 percent in that time. The central bank on Nov. 1 raised its benchmark interest rate for a fifth time in nine weeks to rein in inflation.
"Indonesian banks shares have declined too much and selective stocks are cheap," said Alvin Pattisahusiwa, who helps manage the equivalent of $199 million at Fortis Investments in Jakarta. "With the central bank expecting inflation to slow at the end of next year, interest rates will decline and that will help banks."
Bank Indonesia's Governor Burhanuddin Abdullah said on Nov. 16 that inflation may "gradually" slow to between 7 percent and 8 percent at the end of next year. Inflation, which reached 17.9 percent in October following the government's Oct. 1 fuel price increases, may stay above 10 percent until the end of the third quarter of 2006, he said.