Shares down on interest rate fears

Shares down on interest rate fears

Dow Jones, Jakarta

Shares ended lower on Friday for the second consecutive day, hurt by concerns of rising interest rates and the continued weakness of the rupiah, dealers said.

The weighted average of Bank Indonesia's one-month benchmark notes Wednesday rose to 7.34 percent from 7.33 percent on Wednesday.

Analysts said higher interest rates could spur investors to switch their equity portfolio to fixed-income instruments for higher returns.

"We had tons of negative sentiment here," said a trader with a local brokerage. He added that local political uncertainty ahead of the July's presidential polls also kept sentiment low.

The Jakarta Stock Exchange's main index ended down 7.422 points, or 1.1 percent, to hit a four-week low at 692.715.

Decliners edged gainers 68 to 21, with 72 stocks unchanged.

Volume was 470 million shares valued at Rp 335 billion (US$35.64 million).

Telekomunikasi Indonesia fell Rp 100, or 1.5 percent, to Rp 6,600 after its American Depositary Receipts fell 1.7 percent to $14.31 in New York overnight.

Indonesian Satellite Corp. dropped Rp 75, or 1.9 percent, to Rp 3,825, in line with its ADRs' 0.9 percent decline to $20.86.

Bank Mandiri ended down Rp 50, or 4.4 percent, to Rp 1,075 on worries that the higher rates could hurt its net interest margin.

Shares in nickel miner International Nickel Indonesia bucked the trend, gaining Rp 2,100, or 7 percent, to Rp 7,650 on a rebound.

Dealers said they expect the market Monday to trade flat to slightly higher on a rebound after falling in the previous two sessions.

Meanwhile, the rupiah ended steady against the U.S. dollar on Friday as market participants were reluctant to build fresh positions ahead of the weekend amid absence of fresh incentives, dealers said.

The rupiah closed at Rp 9,405 per dollar, unchanged from its close Thursday.

Dealers said local companies were still keen to buy the dollar near Rp 9,400 to hedge offshore debts, preventing the unit from falling further.

"Dollar demand and supply mostly matched around Rp 9,400 amid lack of fresh factors," a dealer said.

Mandiri Sekuritas said in a research note that the rupiah will likely trade between Rp 9,000 and Rp 9,500 for a while. "Once the political uncertainties are over, at least until the upcoming presidential election, the rupiah may start to strengthen toward Rp 8,800 by year-end," the local investment house said.

Dealers expect the rupiah to trade between Rp 9,400 and Rp 9,450 per dollar Monday.