Shares end higher on gains by Gudang Garam, Telkom

Shares end higher on gains by Gudang Garam, Telkom

Dow Jones, Jakarta

Indonesian shares ended higher on Tuesday led by a rebound in
cigarette maker Gudang Garam and gains in bellwether
Telekomunikasi Indonesia, dealers said.

They said progress on several Asian markets improved sentiment
on the local bourse, but lingering concerns over the nation's
currency fluctuation discouraged investors from taking strong
buying positions.

"But, in terms of value and volume, the trade today was much
better than in the previous session," said a trader with Andalan
Artha Advisindo. She expects the main index to hit the level of
1110 on Wednesday although profit taking could dampen progress.

The Jakarta Stock Exchange Composite index ended up 0.5
percent, or 5.012 points, at 1105.890 points.

Gainers led decliners 57 to 48, with 70 stocks unchanged.
Volume was 1.05 billion shares valued at Rp 912 billion, compared
with 645 million shares valued at Rp 714 billion on Monday.

Gudang Garam rose 3.2 percent to Rp 12,750 on a rebound and
renewed expectations that the recent government imposed 15
percent increase in cigarette retail prices won't affect its
sales much as the company can pass on the hikes to consumers.
Garam's rival Hanjaya Mandala Sampoerna gained 2.4 percent to
Rp 8,450.

"Their 2005 sales volume may be hurt, but sales value may be
flat or even slightly higher from last year," said a tobacco
analyst with a state-owned securities firm.

Telkom added 1 percent to Rp 4,875 on expectations the company
will pay a higher 2004 dividend and after its American depository
receipts in New York rose 0.3 percent to US$20.0. Telkom's rival
Indonesian Satellite ended unchanged at Rp 5,400.

Bank Lippo extended its gains for the second consecutive
session on news Khazanah Nasional Bhd., Malaysia's state-owned
investment arm, has emerged as a main contender to acquire a
controlling stake in the bank. Bank Lippo rose 2.8 percent to
Rp 1,090.

Dealers said losses in Bank Mandiri on profit taking and as it
traded ex-dividend offset the main index's gains.

Bank Mandiri, which finished registering shareholders eligible
for its Rp 70 a share dividend on Monday, fell 4 percent to
Rp 1,450.

Dealers said they expect the market to trade slightly lower
Wednesday on profit taking after gains in the previous four
sessions.

The Indonesian rupiah closed steady on Tuesday as capital
flows into the local market helped the currency weather the
dollar's broad bullishness, dealers said.

The dollar closed at Rp 9,609, little changed from its close
on Monday at Rp 9,610.

The greenback rose to an intraday high of Rp 9,640, tracking
the dollar's rise versus most global currencies. But the dollar's
gains against the rupiah provided an opportunity for offshore
investors to buy the rupiah.

Foreign investors bought the rupiah likely because they
participated in the government's bond auction on Tuesday. The
government issued a total of Rp 3.85 trillion notes at an average
11.25 percent for the 11-year tenor and 11.59 percent for the 15-
year tranche. The amount was higher than the Rp 2.5 trillion the
government had originally indicated.

Secondly, dealers suspected that the U.S. tobacco company
Philip Morris bought the rupiah to settle its recent acquisition
in the local cigarette company HM Sampoerna.

"I suspect Philip Morris still needed to buy the rupiah
today," a dealer with a foreign bank in Jakarta said.

Dealers expect the dollar's global strength to give it a boost
against the rupiah on Wednesday as capital inflows are not
expected again.

Dealers expect the greenback to trade between Rp 9,590 and Rp
9,630 on Wednesday.