Jakarta stock index up, Indosat gains

Jakarta stock index up, Indosat gains

Naila Firdausi, Bloomberg/Jakarta

Indonesia's key stock index rose for a fifth day. PT Indosat led the advance after the rupiah had its biggest advance in more than a month, boosting expectations foreign debt and import costs will fall.

PT Bank Central Asia and real estate company PT Summarecon Agung slid after the central bank raised interest rates on Tuesday, spurring concern demand for housing loans will slow.

The Jakarta Composite Index gained 2.89, or 0.3 percent, to 1104.06 at the 4 p.m. local time close. The benchmark earlier rose as much as 0.8 percent and fell as much as 0.6 percent. Declining stocks led gainers 65 to 56.

The rupiah strengthened for a second day, advancing 1.5 percent to 10,026 against the dollar 4:02 p.m. in Jakarta, the largest advance since Aug. 31.

The appreciation, helped by the rate increase and government moves to cut fuel subsidies, pared the currency's loss to 7.6 percent this year. The currency climbed to 10,021 a dollar earlier, the highest since Sept. 15.

Indosat, the second-biggest telephone company, rose Rp 250, or 4.5 percent, to Rp 5,800 on optimism a stronger rupiah will cut the cost of importing equipment and servicing debt. The company said on Aug. 30 it had US$550 million in debt.

PT Excelcomindo Pratama, the third-biggest phone company and with $350 million of debt, climbed Rp 350, or 14 percent, to Rp 2,875. Excelcomindo also rose after the company said it may return to profit in 2006, helped by rising number of subscribers.

Bank Indonesia on Tuesday raised its benchmark interest rate to 11 percent, the highest in more than two years, and lifted its inflation forecast for this year to 12 percent from 9 percent.

"The rate increase will help stem the rupiah's decline," said Irvin Patwadiwiria, who helps manage the equivalent of $30 million at PT Batavia Prosperindo Aset Manajemen in Jakarta.

The increase followed the government's move to raise subsidized fuel prices on Oct. 1. The central bank also cut this year's growth forecast to 5.7 percent from 5.9 percent.

"Interest rate-sensitive sectors such as banks, autos and property will be hurt by the rate increase because people will borrow less," said Edwin Sinaga, senior manager for equity at PT Kuo Capital Raharja in Jakarta.