RI shares end higher on year-end window dressing

RI shares end higher on year-end window dressing

Dow Jones, Jakarta

Indonesian shares ended higher Friday on window-dressing buying as fund managers sought to improve their equity portfolios before the year-end book-closing, dealers said.

Expectations that the economy will perform better under the new government also spurred those with a mid-term investment focus to continue to buy Indonesian shares, dealers said.

The Jakarta Stock Exchange Composite Index ended up 16.188 points, or 1.7 percent, at 973.354.

Gainers led decliners 107 to 37, with 62 stocks unchanged.

Volume was 1.7 billion shares valued at Rp 1.5 trillion.

Bellwether Telekomunikasi Indonesia headed the gainers. The stock rose 1.5 percent at Rp 4,950 on the company's plan to buy a stake of up to 30 percent in an Asian telecommunications company next year.

Dealers said investors continued to buy shares of cement maker Semen Gresik on news the government expects to settle by Jan. 28 its dispute about management control with Mexico's Cemex, which has a 25 percent stake in the Indonesian firm. Gresik rose 2.9 percent at Rp 16,100.

Cigarette maker Gudang Garam rose 1.5 percent to Rp 13,250 and rival Hanjaya Mandala Sampoerna climbed 4.7 percent to Rp 6,750.

Dealers said they expect the market to trade higher Monday on further year-end window dressing.

Meanwhile, the rupiah ended lower for the second consecutive session Friday amid rising dollar demand from local corporates to settle their foreign debts, dealers said.

The dollar finished at Rp 9,315, up from its close Thursday at Rp 9,270. The U.S. unit hit an intraday high of Rp 9,330.

"The fall of the rupiah is purely on rising demand for the dollar," said a trader with a foreign bank. Underlying sentiment for the rupiah, he said, remains positive amid expectations that the economy will perform better under the new government.

Demand for the dollar is usually robust toward the year-end as local companies repay maturing offshore debts. Local companies are saddled with around $60 billion in offshore borrowings.

Dealers said a tight liquidity position in the rupiah, however, prevented the U.S. currency from strengthening further.

"The dollar's rally was also limited by worries that the central bank would intervene in the market to defend the rupiah," said another trader with a state-owned bank.

Analysts say Bank Indonesia needs to stop the rupiah from falling further to help curb imported inflation. If it does so, the central bank wouldn't have to raise interest rates - which could hurt the economy.

Dealers expect the U.S. currency to trade between Rp 9,300 and Rp 9,350 Monday.