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.