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.