Jakarta Stocks fall on inflation fears; Mandiri, Telkom drop
Jakarta Stocks fall on inflation fears; Mandiri, Telkom drop
Bloomberg, Jakarta
Jakarta stocks fell, led by Bank Mandiri and PT Astra
International, after the nation's central bank raised its
inflation forecast for this year, a signal it may boost interest
rates further.
"The new forecast shocked everyone," said Mustafa Kamil, an
analyst at Phillip Securities Indonesia in Jakarta.
"Faster inflation means higher interest rates, which will hurt
banks. The consumer sector will also be hit because people will
think twice before making purchases."
The Jakarta Composite Index fell for a second day, losing
10.91, or 1 percent, to close at 1,062.17. Declining stocks led
gainers 65 to 26.
Bank Indonesia on Monday raised its inflation forecast for
this year to 14 percent from an earlier estimate of 12 percent
because of a government decision to increase fuel prices.
The bank said it may boost interest rates.
Bank Mandiri, the country's largest lender by assets, declined
Rp 40, or 2.9 percent, to 1,340 on concern higher interest rates
will slow demand for loans and boost costs to pay depositors.
Bank Permata, the seventh-largest lender, slipped Rp 10, or 1.8
percent, to Rp 560.
Stocks also fell after Coordinating Minister for Economic
Affairs Aburizal Bakrie said the economy may grow 5.8 percent
this year, lower than the government's previous forecast of 6
percent, as higher fuel prices and increased interest rates may
curb consumer spending.
Consumer spending accounts for 65 percent of the country's
gross domestic product.
The government more than doubled retail fuel prices on Oct. 1
to cut the cost of energy subsidies.
The move spurred Bank Indonesia to raise its benchmark rate a
full point to 11 percent on Oct. 4, the fourth increase in nine
weeks.
"We are underweight in the banking sector" because of rising
inflation and interest rates, said Budi Budar, who helps manage
about US$110 million at PT NISP Sekuritas.
"We are also underweight on the consumer sector."
Astra, Asia's biggest auto retailer by value, fell Rp 100, or
1.1 percent, to 9,100. PT Ramayana Lestari Sentosa, Indonesia's
second-largest retailer by sales, dropped Rp 20, or 2.8 percent,
to Rp 700.
PT Telekomunikasi Indonesia, or Telkom, Indonesia's biggest
phone company, slid Rp 100, or 1.9 percent, to Rp 5,050. The
stock also fell on concern a weaker rupiah will hurt earnings.
Telkom, which had US$841 million in dollar-denominated debt at
the end of June, faces higher repayments costs as the local
currency declines.
"Forex losses are seen hurting Telkom's third-quarter profit,"
Yuga Wijanarko, an analyst at PT Danareksa Sekuritas, wrote in a
note to clients on Tuesday.
The rupiah dropped 5.2 percent in the three months ended Sept.
30 against the dollar, making it the world's second worst-
performer in the quarter among 61 currencies tracked by
Bloomberg.
PT Energi Mega Persada, Indonesia's second-largest publicly
traded oil and gas company, declined Rp 20, or 2.6 percent, to
740. PT Bumi Resources, the biggest exporter of coal, slipped Rp
10, or 1.3 percent, to Rp 780.
PT Bank Central Asia, Indonesia's largest lender by market
value, gained Rp 25, or 0.8 percent, to Rp 3,350. Nine-month
profit rose 12.4 percent on the year to Rp 2.63 trillion as it
increased lending, it said yesterday after the market closed.