Shares end higher on late buying in blue chips

Shares end higher on late buying in blue chips

Dow Jones Jakarta

Indonesian shares ended marginally higher on Tuesday as late gains in select bank and cement blue chips reversed earlier losses, dealers said.

Overall sentiment remained cautious due to the prolonged political uncertainty ahead of the presidential runoff in September, they added.

"The market slightly recovered from recent sluggish performance," said a trader with Kuo Capital Securities.

After staying in negative territory for most of the session, the Jakarta Stock Exchange composite index ended up 2.403 points, or 0.3 percent, at 752.443, up from an intraday low of 748.719.

Gainers led decliners 65 to 38, with 75 stocks unchanged. Volume was 727 million shares valued at Rp 544 billion.

Bank Mandiri, the nation's largest lender, rose Rp 25, or 2 percent, to Rp 1,250, and Bank Danamon ended up Rp 25, or 0.8 percent, at Rp 3,300 on a rebound.

Cement maker Semen Gresik jumped Rp 350, or 4.1 percent, to Rp 8,700 on bargain hunting and expectations of higher full-year earnings. Gresik's rival Indocement Tunggal Prakarsa gained Rp 25, or 1.6 percent, at Rp 1,550.

Shares in heavyweight Telekomunikasi Indonesia succumbed to profit taking, down Rp 100, or 1.3 percent, at Rp 7,550.

Dealers said they expect the market on Wednesday to trade higher on a further rebound.

Meanwhile, the rupiah closed lower on Tuesday as the currency's falling yields in short-term swap transactions triggered dollar-buying amid expectations of a further rate hike in the U.S., dealers said.

The dollar closed at Rp 9,200, up from its close of 9,185 on Monday. The dollar touched an intraday high of 9,275 before profit-taking erased most of its gains.

The rupiah's short-term yields fell because banks in Jakarta adjusted their foreign exchange positions to comply with the central bank's new regulation on foreign exchange net open positions.

The central bank has set Sept. 2 as the deadline for banks to bring down the on-balance sheet foreign exchange net open position to a maximum 20 percent of capital.

The overnight swap point, which shows the rupiah overnight swap yields, fell to 0.0-0.2 point, from 0.5-1.0 point on Monday, and the on-week swap point dropped to 1.0-3.0 points from 4.0-6.0 points, dealers said.

"The adjustment made the rupiah yields in the swap transaction cheap, which triggered dollar-buying amid expectations of a further rate hike in the U.S.," a dealer said.

In a meeting later on Tuesday, the U.S. Fed is widely expected to raise the overnight lending rate by 25 basis points to 1.50 percent.

Bank Indonesia Governor Burhanuddin Abdullah told reporters earlier on Tuesday that the central bank "keeps rate hike option open" if the rupiah is under pressure again.

"For us, the (rupiah's) stability cannot be forsaken," he said.

Dealers said demand from local importers, such as national oil company Pertamina, also helped push the dollar higher.

The current rise in oil prices is boosting the amount of dollars Pertamina needs, dealers said.

They expect the dollar to trade between 9,190 and 9,280 on Wednesday.