RI shares end lower on selling in firms sensitive to dollar

RI shares end lower on selling in firms sensitive to dollar

Dow Jones, Jakarta

Indonesian shares ended lower for the seventh consecutive session on Monday, led by selling in shares of companies that are sensitive to the movements of the rupiah against the U.S. dollar, dealers said.

"Shares of companies that have sizable dollar debts were again hit by the weaker rupiah," said a trader with a local securities firm. He added that lingering worries that the rupiah will continue to weaken due to rising dollar demand from local companies to repay debts by the end of the month kept overall sentiment very weak.

The weaker rupiah could push up debt services and increase the cost of imported raw materials, which in turn could hurt the nation's economy, analysts said.

The Jakarta Stock Exchange's Composite Index fell 1.1 percent, or 11.600 points, to 1076.353, up from its intraday low of 1072.000. The main index has fallen 9.7 percent since it hit an all time high of 1192.203, on Aug. 3.

Dealers expect the main index could test the psychological level of 1050 on Tuesday if selling continues.

On Monday, decliners led gainers 96 to 24, with 62 stocks unchanged. Volume fell to 1.2 billion shares valued at Rp 963 billion, compared with 1.76 billion shares valued at Rp 1.8 trillion on Friday.

The U.S. dollar was trading at Rp 10,030 at 9:00 GMT, compared with its previous close of Rp 10,000.

Food producer Indofood Sukses Makmur fell 7 percent to Rp 850 on expectations that it will book lower 2005 net profit due to its higher debt burden. Analysts said Indofood has around $400 million of debts.

The weaker rupiah also hit pulp producer Indah Kiat, which lost 5.4 percent to Rp 1,060, and cement maker Indocement Tunggal Prakarsa, which fell 0.8 percent to Rp 3,150.

Analysts said the weaker rupiah could also weaken consumer purchasing power, hurting sales of consumer product companies. Cigarette maker Gudang Garam lost 3 percent to Rp 11,400 and consumer good producer Unilever ended 0.6 percent lower at Rp 4,425.

Shares in banks also continued to succumb to selling pressure on expectations that the central bank will continue to increase its key interest rate to defend the rupiah.

A high interest rate could reduce net interest margins and increase the cost of funds for banks.

Bank Rakyat Indonesia fell 4.5 percent to Rp 2,675 and Bank Negara Indonesia lost 3.2 percent to Rp 1,530.

Dealers said they expect Indonesian shares to trade flat to slightly lower on Tuesday on further selling in bank blue chips.