Indonesia's stock rises, led by banking bluechips

Indonesia's stock rises, led by banking bluechips

Bloomberg, Jakarta

Indonesia's key stock index rose for a fourth day. PT Bank
Mandiri led gains in banks on expectations lower interest rates
will boost profits this year.

PT Indah Kiat Pulp & Paper fell Rp 50, or 5.6 percent,
to Rp 850 on concern a 17 percent surge in the past five days to
yesterday was excessive. Earlier in the week, its parent company
won a court case against bondholders in New York.

The Jakarta Composite added 3.525, or 0.5 percent, to 789.432
at the 4 p.m. market close in Jakarta. As many as 52 stocks rose,
72 fell, and 214 were unchanged.

Bank Mandiri, Indonesia's biggest lender by assets, surged
Rp 100, or 6.9 percent, to a record Rp 1,550. PT Bank Negara
Indonesia, the country's second-biggest lender by assets, gained
Rp 25, or 2 percent, to Rp 1,300.

With lower interest rates, banks should see more lending
and better performances this year," said Mirza Adityaswara, head
of research at PT Bahana Securities, in a phone interview in
Jakarta. "Looking into Danamon's preliminary results, Mandiri and
other banks may also have booked higher profits last year."

The benchmark interest rates on one-month central bank bills
fell to 7.66 percent in last week's auction, the lowest since the
bills first traded in July 1998. The average lending rates by 131
banks in Indonesia fell to 16 percent yesterday, from 19.9
percent on Jan. 1 last year.

The Jakarta Stock Exchange halted trading of Danamon shares
today, as well as shares of PT Bank Central Asia, PT Bank Niaga
and PT Bank Internasional Indonesia, as the government plans to
sell some of its stakes in the four banks. They will resume
trading today.

PT Gudang Garam rose Rp 650, or 4.6 percent, to Rp 14,950.
CLSA Asia-Pacific Markets analyst Wilianto Ie issued a "buy"
recommendation on the stock yesterday because he expects clove
prices used in Indonesian cigarettes to remain low
and the government to refrain from raising cigarette taxes.

"We remain positive on Gudang Garam's performance in 2004
and 2005 as consumption recovery looks to continue," Ie said in
his report.

The government said last year it wants to keep excise tax
unchanged in 2004. The tax, imposed per stick sold, and the
minimum cigarette prices of most cigarettes were raised in 2002
and 2001.