Jakarta shares end up; Indosat rises

Jakarta shares end up; Indosat rises

Dow Jones, Jakarta

Indonesian shares reversed early losses to end slightly higher on Wednesday as bargain-hunters reentered the market, dealers said.

"Bargain-hunters reentered the market quicker than we expected as most blue chips still looked overbought," a dealer with a local securities firm said. "It likely showed that investors are strongly confident in Indonesia."

The Jakarta Stock Exchange's Composite Index closed up 0.1 percent, or 1.369 points, at 1134.692, after having been as low as 1121.816 intraday.

Gainers led decliners 62 to 53, with 66 stocks unchanged. Volume traded was 1.5 billion shares valued at 1.4 trillion, compared to 1.6 billion shares valued at Rp 1.4 trillion on Tuesday.

Leading the rise, Indonesian Satellite, the country's second- largest telephone company after rival Telekomunikasi Indonesia, added 1.8 percent to Rp 5,550.

Bank Mandiri gained 0.4 percent to Rp 1,520.

Second liners also attracted investor interest, with state-run gold and nickel miner Aneka Tambang rising 2.1 percent to Rp 2,400, the local unit of Canadian's Inco, Inco Indonesia, advancing 2.1 percent to Rp 14,650 and plantation concern Astra Agro increasing 2.6 percent to Rp 4,000.

Indonesia's largest telecommunications service provider Telekomunikasi Indonesia, or Telkom, fell nearly 2 percent to Rp 5,000 on news of a corruption investigation into the company.

Cigarette maker Gudang Garam dropped 0.4 percent to Rp 12,500 because its cigarette sales are expected to be hurt by the government move next month to raise minimum cigarette prices.

Dealers expect further bargain-hunting on Thursday, but high oil prices globally could continue to cloud market sentiment.

The Indonesian rupiah rose Wednesday due to likely market intervention by the country's central bank and the U.S. dollar's weakness against other currencies, dealers said.

The dollar closed at Rp 9,648, down from its close on Tuesday at Rp 9,665.

The rupiah also benefited from an easing in dollar demand from local corporates, dealers said. Much of that demand was on behalf of state oil importer Pertamina, which is scrambling to comply with a government directive to increase its fuel reserves to cover consumption for 20 days from a current level of 12 days.

"Basically, today was a quiet trading day compared to yesterday's volatility, but again the dollar demand for local corporates is still healthy for the same reason of importing oil," a dealer said.

"Also, we see some dollar-selling by state banks, probably on behalf of the central bank as part of its regulatory role in preventing the dollar from rising too fast (against the rupiah)."

The dollar's weakness against other major currencies also helped the rupiah. The dollar fell to HK$7.7706 on Wednesday from HK$7.7743 on Tuesday due to renewed speculation about a possible revaluation of the Chinese yuan. Against the New Taiwan dollar, the U.S. dollar closed at NT$31.355, down from NT$31.390 on Tuesday.

Indonesia's looming implementation of tighter forex trading rules has also severely trimmed speculative trading in the rupiah, traders said.

Bank Indonesia will implement next month regulations that will restrict the amount of dollars banks can borrow from offshore counterparts without underlying transactions at $1 million. Previously, there was no cap on the amount.

Central bank officials have said that the move is aimed at reducing the amount of speculative offshore money coming into Indonesia, which can destabilize the exchange rate.

"Domestic flow is the main driver (of dollar demand)," a dealer said. "Since the regulations came out, I think speculative flows have very much reduced."

Dealers expect the dollar to trade between Rp 9,630 and Rp 9,680 on Thursday.