Shares end higher as bank blue chips rebound

Shares end higher as bank blue chips rebound

Dow Jones, Jakarta

Indonesian shares ended marginally higher on Friday led by a rebound in select bank blue chips after falls in the previous four sessions due to the weaker rupiah and high interest rate, dealers said.

They said gains in several regional markets improved sentiment on the local bourse but lingering worries that the central bank may continue to increase the key interest rate to defend the rupiah prevented investors from taking up strong buying positions.

The Jakarta Stock Exchange's Composite Index ended up 2.154 points, or 0.2 percent, at 1110.557, up from an earlier low of 1103.206.

"Some bargain hunting by foreign funds managed to lift the main index from its low," said a trader with a local securities firm. She added that overall sentiment was cautious, with many staying on the sidelines given an absence of fresh leads.

Gainers led decliners 61 to 48, with 63 stocks unchanged. Volume was 975 million shares valued at Rp 554 billion, compared with 1.4 billion shares valued at Rp 1.2 trillion on Thursday.

Bank Danamon led gainers, rising 2 percent to Rp 5,000, Bank Rakyat Indonesia rose 1.7 percent to Rp 2,925 and Bank Central Asia ended up 1.4 percent at Rp 3,525. The banks rebounded after falls in the previous four sessions on worries their net interest margins will be shaved due to the high interest rate.

Benchmark one-month Bank Indonesia notes rose on Wednesday to 8.44 percent from 8.25 percent.

Oil producer Medco Energi gained 1.3 percent to Rp 3,775 on expectations of improved first-half earnings due to high oil prices.

Dealers said shares in bellwether Telekomunikasi Indonesia continued to succumb to selling pressure on lingering worries that the company may face a trading suspension on the New York bourse if it fails to file its 2004 earnings to the U.S. Securities and Exchange Commission, or SEC, by July 15.

Dealers said they expect the market to trade slightly higher on Monday led by a further rebound in banking stocks.

The rupiah ended up on Friday as suspected central bank intervention helped to bolster the currency against the dollar, dealers said.

The dollar closed at Rp 9,790, slightly down from Rp 9,795 on Thursday. The dollar hit a high of Rp 9,833 in intraday trade.

"The market was a little bit off today as Bank Indonesia kept intervening at the Rp 9,830 mark," a dealer from a foreign bank said.

"I think there was also a trend of players who'd overbought dollars selling back into the market."

Friday's closing rupiah result also reflects the impact of the government's move late Tuesday to directly supply state oil and gas firm PT Pertamina with dollars through the central bank.

Dealers have attributed Pertamina's voracious dollar appetite to fund oil imports amid record-high global oil prices for a seven-day slide in the rupiah's value that didn't stop until Wednesday. Dealers and economists say Pertamina normally accounts for up to 25 percent of dollar demand in the local currency market.

Central bank and senior government officials have said that the rupiah will meet an official projected average value of Rp 9,300 against the dollar in 2005. But dealers say that a market tracking a strong dollar against regional currencies and continuing domestic corporate demand for dollars will weigh on the rupiah.

The dollar will likely trade between Rp 9,770 and Rp 9,800 on Monday, dealers said.