Jakarta shares up; Telkom gains on dividend hopes

Jakarta shares up; Telkom gains on dividend hopes

Dow Jones, Jakarta

Jakarta shares ended higher on Friday led by further foreign
buying in bellwether Telekomunikasi Indonesia amid hopes that the
company will pay a higher 2004 dividend, dealers said.

"Gains in Telkom spurred buying in other blue chips that have
solid fundamentals," said a trader with Andalan Artha Advisindo.

She added that underlying sentiment regarding Indonesian
shares remains positive for foreign investment amid expectations
that economic growth will pick up pace this year.

The government expects the economy to grow by 6 percent this
year compared with 5.4 percent in 2004.

Dealers said continued rallies across Asian markets also
boosted buying on the local bourse.

The Jakarta Stock Exchange Composite index ended up 1.4
percent, or 16.06 points, at 1,141.82.

Gainers led decliners 88 to 25, with 71 stocks unchanged.
Volume was 1.5 billion shares valued at Rp 1.7 trillion, compared
with 1.4 billion shares valued at Rp 1.5 trillion on Thursday.

Telkom rose 5.6 percent to Rp 5,200 on expectations that it
will put aside more than 50 percent of its 2004 net profit for
dividend payment.

Telkom's rival Indonesian Satellite (Indosat) gained 3.7
percent to Rp 5,650 on expectations of improved first-half
earnings.

Dealers said foreign investors also bought shares in gas
producer Perusahaan Gas Negara on its solid business outlook.

"We think that the outlook for the natural gas industry is
attractive and that the company is uniquely positioned given its
monopoly status in the market," said UBS in a research note.
Perusahaan Gas jumped 7.3 percent to Rp 3,325.

Shares in automotive company Astra International fell 3.3
percent to Rp 13,150 on profit taking and as the shares traded
ex-dividend.

Dealers said they expect the market to trade higher on Monday
on further foreign program buying ahead of the close of the
first-half book by the end of June.

On the currency market, the rupiah ended steady as investors
squared their positions while awaiting details about the central
bank's plan to tighten foreign-exchange trading next month,
dealers said.

The dollar closed at Rp 9,620, unchanged from its close on
Thursday. The rupiah fell to an intraday low of Rp 9,653 before
recovering.

"Investors squared their position ahead of the central bank's
plan to brief bankers over its new policy on Monday," said a
trader with a foreign bank.

Dealers also attributed the retreat of the greenback from its
highs on Friday to profit taking by foreign funds after recent
gains.

Bank Indonesia said in a regulation issued late on Wednesday
that effective July 14, it will cut foreign-exchange derivative
transactions by banks here with foreign counterparts against the
rupiah to a maximum of $1 million from a previous total of $3
million.

Dollar purchases in outright forward transactions and swaps
are also limited to a $1 million total. These types of
transactions previously weren't subject to any cap.

The central bank also imposed a three-month minimum investment
hedging period on foreign-exchange transactions.

That stipulation means investors with underlying investments
in Indonesia must keep their funds in the country for at least
three months, an official with the central bank said.

Previously, such deals had no minimum time period.

Analysts said the new move may not help the central bank
achieve its goal of helping the rupiah, as genuine dollar demand
from local companies to pay offshore obligations -- including
rising import bills -- remains robust.

Dealers expect the dollar to trade between Rp 9,580 and Rp
9,650 on Monday.