RI Stocks fall on bad-loan concern
RI Stocks fall on bad-loan concern
Naila Firdausi, Bloomberg/Jakarta
Indonesian stocks fell for the first day in three. PT Bank Rakyat
Indonesia (BRI) and PT Bank Mandiri led declines on a report the
nation's lenders face rising non performing loans because of
higher interest rates.
The benchmark Jakarta Composite Index slid 2.65, or 0.2
percent, to 1102.98 at the 4 p.m. local time close. Losing stocks
led gainers 58 to 49.
Non-performing loans in Indonesia will probably rise to 9.4
percent of total bank credit this year and climb to 10 percent in
2006 from 5.75 percent last year, Bisnis Indonesia newspaper
said, citing a report by PT Bank Internasional Indonesia (BII).
Bank Indonesia, the nation's central bank, on Oct. 4 raised
its benchmark interest rate to 11 percent, the highest in more
than two years, to control inflation after the government more
than doubled retail fuel prices on Oct. 1.
"Banks are facing more bad loans as higher rates will make it
more difficult for debtors to pay," said Adrian Rusmana
Setiamihardja, head of research at PT BNI Securities in Jakarta.
BRI, the country's fourth-largest lender by assets, lost Rp
100, or 4.1 percent, to Rp 2,325. Mandiri, the largest, fell Rp
20, or 1.4 percent, to Rp 1,440.
PT Bank Central Asia, the second largest, slid Rp 25, or 0.7
percent, to Rp 3,400. BII, the No. 6, was unchanged at Rp 155
after earlier dropping 3.2 percent.
Lenders also fell on speculation the U.S. Federal Reserve's
concern about inflation will prompt it to keep raising rates,
leading to further pressure on Bank Indonesia to boost its
benchmarks, BNI Securities' Setiamihardja said.
Minutes of last month's Fed meeting showed growing worries
about inflation after Hurricane Katrina struck the Gulf Coast in
August, prompting policy makers to say that "further rate
increases probably would be required." The Fed voted 9-1 last
month to raise its lending rate for an 11th straight time since
June 2004, to 3.75 percent, the highest in four years.
A measure that tracks Indonesia's 64 finance companies
contributed the most to the broader index's decline on Wednesday.
PT Indocement Tunggal Prakarsa, Indonesia's second-biggest
cement maker by volume, lost Rp 75, or 2.5 percent, to Rp 2,925.
"Higher interest rates will also hurt demand for cement,
because most infrastructure and housing projects are funded
through loans," said Mohammad Reza, head of research at PT Kuo
Capital Raharja in Jakarta.
PT Aneka Tambang (Antam), the world's fifth-largest nickel
producer, gained Rp 25, or 0.9 percent, to Rp 2,800. Antam will
almost triple ferronickel output to 22,000 tons in 2006 from
7,400 tons in the current year, President Director Dedi Aditya
Sumanagara said on Tuesday at a mining conference in Manila.
PT Barito Pacific Timber, Indonesia's biggest plywood maker,
lost Rp 40, or 5.4 percent, to Rp 700 as investors judged
Tuesday's jump excessive. The shares surged 25 percent on Tuesday
on a report the company is in talks to build an oil refinery.
PT Medco Energi Internasional, the nation's biggest publicly
traded oil and gas company, climbed for a second day, adding Rp
50, or 1.4 percent, to Rp 3,700. The company and Finnish partner
Fortum Oyj won a Rp 2.86 trillion (US$282 million), 23-year
contract from state utility PT Perusahaan Listrik Negara to
maintain and operate a power plant, it said on Tuesday.