Shares end at record high on new cabinet

Shares end at record high on new cabinet

Dow Jones, Jakarta

Indonesian shares ended at a record high on Monday on continued foreign buying amid expectations that President-elect Susilo Bambang Yudhoyono will form a market-friendly cabinet to fix the nation's economy, dealers said.

They added that gains across Asian markets after Wall Street's rally Friday and expectations that the central bank won't raise interest rates after September's softer inflation report also spurred buying.

"I think the main index is on track to exceed the 900 level by the end of the year," said Mohammad Reza, head of research department at Kuo Capital Securities.

The Jakarta Stock Exchange Composite index rose 20.544 points, or 2.5 percent, to hit an all-time closing high of 856.449. Gainers led decliners 107 to 39, with 68 stocks unchanged.

Volume was an exceptional 2.9 billion shares valued at Rp 2.1 trillion.

The Central Statistics Agency (BPS) announced Friday that inflation in September eased to 6.3 percent compared with 6.7 percent in August. Benign inflation may ease pressure on the central bank to raise domestic interest rates more aggressively, analysts said.

Friday, the Dow Jones Industrial Average index rose 1.1 percent, while the Nasdaq Composite Index gained 2.4 percent.

Dealers said investors bought telecommunications, bank and mining blue chips on hopes of improved earnings performance this year.

Bellwether Telekomunikasi Indonesia jumped 3.6 percent to Rp 4,350 after its American Depositary Receipts Friday rose 3.5 percent to US$18.30.

Indonesian Satellite Corp. gained 2.9 percent to Rp 4,450 on bargain-hunting.

Nickel miner International Nickel Indonesia climbed 9.2 percent, or Rp 1,050, to Rp 12,450 on higher nickel prices.

Expectations that the central bank won't be raising local rates pushed up banking stocks, said analysts.

They said low interest rates will push up bank lending - and consequently bank net profits - this year.

Bank Mandiri advanced 5.2 percent to Rp 1,525, Bank Central Asia ended up 4.9 percent at Rp 2,125, and Bank Danamon gained 1.3 percent to Rp 3,875.

Dealers expect the market to take a breather in the next few sessions, with the main index settling at around the 870 level. However, if buying interest continues to be strong, the next target level would be between 900 and 950 - the year-end target of the more bullish analysts.

Meanwhile, the rupiah closed slightly higher, lifted by capital inflows into the local stock market.

The dollar closed at Rp 9,105, down from 9,150 Friday.

"The rupiah was helped by speculative inflows into local portfolios," said a dealer at a foreign bank.

Dealers said some market participants may buy back the dollar Tuesday to lock in their profits against the rupiah, pushing the dollar higher. They expect the dollar to trade between 9,070 and 9,150 Tuesday.