Shares down as Telkom, Astra lead losses

Shares down as Telkom, Astra lead losses

Dow Jones/Jakarta

Indonesian shares ended sharply lower for the second consecutive session on Friday led by further selling in bellwether Telekomunikasi Indonesia and most bank blue chips, dealers said.

They listed the weak local currency, high interest rates and the government's plan to further increase interest rates as negative factors that hurt overall sentiment.

"The market lost ground again and I expect the main index to test below the 1150 level next week, if selling continues," said a trader with Paramitra Securities.

The Jakarta Stock Exchange's Composite Index fell 1.2 percent, or 14.003 points, to 1153.969.

Decliners led gainers 95 to 30, with 66 stocks unchanged. Volume fell to 1.25 billion shares valued at Rp 1.7 trillion, compared with 1.5 billion shares valued at Rp 1.2 trillion on Thursday.

Telkom fell 3.6 percent to Rp 5,350 on a further price correction after Morgan Stanley cut its view to equal weight from overweight, as the risk of substitution of fixed-line phones for mobile services rises. Telkom's rival Indosat dropped 0.9 percent to Rp 5,800.

Dealers said investors continued to sell bank blue chips on expectations high interest rates could reduce the banks net interest margin and push up interest expenses.

Bank Mandiri lost 1.2 percent to Rp 1,650, Bank Rakyat fell 1.7 percent to Rp 2,950 and Bank Negara ended down 0.6 percent at Rp 1,630.

Elsewhere, automotive company Astra International continued to succumb to selling pressure, despite JPMorgan saying the recent sharp falls in share price were overdone. Astra lost 0.9 percent to Rp 11,400.

Shares in Indonesia's largest cement producer Semen Gresik bucked the trend, up 0.8 percent at Rp 18,050, after the company said it plans to seek Rp 2 trillion to build a new plant.

Dealers said they expect shares to trade flat to lower on Monday on further price corrections.

The Indonesian rupiah closed higher on Friday likely on intervention by Bank Indonesia to support the local unit, dealers said.

The dollar closed at Rp 9,805, compared with Rp 9,823 on Thursday.

Dealers said the central bank likely sold dollars via state banks to ease dollar demand by market participants covering short positions ahead of the weekend.

Bank Indonesia frequently intervenes to limit the rupiah's depreciation, which could fan inflation.

But there is little expectation that the rupiah will continue gaining next week as global oil prices continue to rise.

"Demand for dollars to cover Indonesia's fuel imports will rise as oil prices are rising," a dealer with a local bank said. "Bank Indonesia may continue to intervene, but I don't think it will help the rupiah a lot."

Indonesia is a net oil importer as declining crude oil production locally can't meet rising demand for fuel.

Dealers expect the dollar to trade between Rp 9,790 and Rp 9,820 on Monday.