Local shares end up, rupiah shows promise

Local shares end up, rupiah shows promise

Dow Jones, Jakarta

Indonesian shares ended higher for the third straight session on Wednesday amid growing expectations that the presidential runoff will run peacefully next week, dealers said.

The stronger rupiah against the U.S. dollar also added to positive sentiment, they said.

The main index, however, was off its intraday high as mostly local investors took profit, they added.

"It could also mean that some investors were reluctant to maintain strong buying positions given possible risks from the elections," said a trader with Kuo Capital Securities.

The Jakarta Stock Exchange Composite index ended up 6.470 points, or 0.8 percent, at 815.486, down from an earlier high of 822.491.

Gainers led decliners 74 to 39, with 90 stocks unchanged. Volume was 2.2 billion shares valued at Rp 1.5 trillion (US$164 million)

Carmaker Astra International led gainers, up Rp 100, or 1.5 percent, at Rp 6,850 on the company's plan to prepay $122 million of loan later this month.

Dealers said investors bought shares in banks on expectations of higher nine-month earnings.

Bank Mandiri rose Rp 25, or 1.8 percent, to Rp 1,450, and Bank Rakyat Indonesia gained Rp 75, or 3.9 percent, at Rp 2,000.

Profit taking hit shares in Indonesian Satellite Corp., down Rp 25, or 0.6 percent, at Rp 4,400, and cement maker Indocement Tunggal Prakarsa, down Rp 75, or 3.8 percent, at Rp 1,900.

Dealers said they expect the market to trade flat to slightly lower Thursday on profit taking after the main index rose 4.1% in the previous three sessions.

Meanwhile, Indonesian rupiah ended flat as profit-taking erased all of the local unit's gains posted earlier in the day.

The dollar ended at Rp 9,110, unchanged from its close on Tuesday.

The U.S. currency fell to an intraday low of Rp 9,065 on continued optimism that Monday's presidential runoff will be smooth and result in market favorite Susilo Bambang Yudhoyono beating incumbent President Megawati Sukarnoputri.

Two opinion surveys published Wednesday showed Megawati heading for defeat despite having formed a coalition with the country's largest party, Golkar.

A poll by the Washington-based International Foundation For Electoral Systems showed that former military general Yudhoyono has the support of 61 percent of voters, compared with 29 percent who say they will choose Megawati.

A separate poll by the Indonesia Survey Institute gave Yudhoyono 61 percent and Megawati 24 percent.

But profit-taking against the rupiah later in the day lifted the dollar, dealers said.

The premium on the one-month dollar-rupiah forward rose to Rp 28, up from Rp 23 late Tuesday, as participants bought back the dollar.

Dealers expect the dollar to trade between Rp 9,050 and Rp 9,150 in the spot market on Thursday.

Elsewhere, the benchmark weighted average rate on Bank Indonesia's one-month Sertifikat Bank Indonesia, or SBI, notes, edged up a tad to 7.39 percent in a twice monthly auction from 7.38 percent, as banks demanded a higher yield amid central bank efforts to absorb excess liquidity.

But the slight increase showed that the central bank is still reluctant to allow rates to rise sharply because this could hurt economic growth and boost coupon payments on government's bonds.