Shares end at record high; Rupiah rallies

Shares end at record high; Rupiah rallies

Dow Jones, Jakarta

Indonesia's main stock index set a fresh record-high closing level on Tuesday, driven by gains in cement and heavy equipment blue chips.

The Jakarta Stock Exchange Composite Index ended up 17.666 points, or 1.8 percent, at 1018.54 points.

Cement companies led the gainers on expectations that the companies' fortunes will improve this year due to reconstruction efforts in the areas devastated by last week's earthquake and tsunami.

The market also welcomed President Susilo Bambang Yudhoyono's statement that the impact of last week's disasters won't likely hurt the country's economic growth this year, traders said.

The government is predicting an economic expansion of 5.5 percent in 2005, outpacing a projected 4.8 percent gross domestic product growth for 2004.

Dealers also said the stronger rupiah against the U.S. dollar and early program buying by many foreign institutional funds helped boost buying.

"We have a lot of positive factors that spurred investors to further snap up Indonesian shares," said a trader with Paramitra Securities.

Gainers led decliners 95 to 39, with 63 stocks unchanged.

Volume was 1.77 billion shares valued at Rp 1.93 trillion, compared with 504 million shares valued at Rp 598 billion on Monday.

Cement maker Semen Gresik rose 3.6 percent to Rp 20,100, while Indocement Tunggal Prakarsa gained 1.5 percent to Rp 3,350. Semen Cibinong jumped 9.8 percent to Rp 670.

Heavy equipment company United Tractors increased 9.7 percent to Rp 2,550 while rival Komatsu Indonesia rose 5.4 percent to Rp 3,425.

Shares of bellwether Telekomunikasi Indonesia gained 0.5 percent to Rp 4,950 on a rebound and after its American Depositary Receipts rose 1.5 percent to $21.34 on Monday.

Dealers expect the market Wednesday to trade higher on follow- through buying in infrastructure-related companies.

In the currency market, the rupiah ended higher after news reports highlighted the possibility of debt relief from international lenders and pledges of aid to help the country rebuild its tsunami-affected areas, dealers said.

The rupiah closed at Rp 9,280 per dollar, down from its close on Monday at Rp 9,305.

Some countries are reported to have been seeking a debt moratorium for tsunami-hit countries, including Indonesia, to help them cope with the impact of last month's disaster.

The local unit also benefited from the bullish sentiment on local stocks.

Still, some dealers said that the rupiah remains vulnerable, with the market watching how the government will handle its plan to reduce fuel subsidies in the state budget.

The government has said that it would raise domestic fuel prices some time this year to cut subsidies, but such a move could trigger widespread public protest.

"It's a catch-22 situation for the government, and the market is keen to see how successful the government will be in overcoming it," a dealer with a foreign bank said.

Dealers expect the dollar to trade between Rp 9,260 and Rp 9,310 on Wednesday.