Jakarta Stock Index rises to 11-month high, Telkom gains
Jakarta Stock Index rises to 11-month high, Telkom gains
Bloomberg, Jakarta
Indonesian stocks rose, lifting the benchmark index to its highest in almost a year, after inflation in May eased to the lowest in 32 months, raising optimism the central bank will cut interest rates. PT Telekomunikasi Indonesia paced gains.
The Jakarta Composite Index climbed 10.948, or 2.2 percent, to 505.724, the highest since June 27, at the 4 p.m. market close in Jakarta. Two shares rose for every one that fell. The benchmark has gained 28.8 percent in dollar terms this year.
Lower rates would lower the discount rate factor, a tool used to value companies, raising their valuations, some analysts said. Companies are valued by calculating the present value of their future cash flow.
The low inflation would "give room to the central bank to further cut interest rates," said Erwan Teguh, an analyst at PT Danareksa Sekuritas. "Lower interest rates mean lower discount rates, thus the value of companies must rise".
Telkom rose Rp 275, or 5.9 percent, to Rp 4,950. Investors expect Telkom to post a higher profit this year, helped by a gain in the rupiah. Telkom pays for its equipment from overseas with U.S. dollars and receives its revenue from telephone services it provides in rupiah. Telkom also has dollar debts.
"The stronger rupiah will boost Telkom's performance," said M. Setyo Adhi, an analyst with PT Samuel Sekuritas, who raised Telkom's 2003 profit forecast to above Rp 6 trillion (US$720 million) from Rp 5.8 trillion, citing benefits from the strengthening rupiah.
The rupiah gained 0.5 percent, to Rp 8270 to the dollar at 4:10 p.m. It gained 2.6 percent to the dollar in April.
PT Unilever Indonesia, the Indonesian unit of the world's biggest food and soap maker, rose Rp 600 rupiah, or 2.5 percent, to Rp 25,100 as the stronger local currency is expected to help boost consumer spending.
PT Gudang Garam, Indonesia's largest cigarette maker, rose Rp 250 rupiah, or 2.5 percent, to Rp 10,250.
PT Indomobil Sukses Internasional, Indonesia's second-largest automaker, rose Rp 225, or 28 percent, to Rp 1,025 after the company reported that 2002 sales rose 22.4 percent to Rp 11.74 trillion. It booked a profit of Rp 971 billion from a loss of Rp 51 billion because of foreign exchange and asset sale gains.