Shares end lower led by selling in Indofood

Shares end lower led by selling in Indofood

Bloomberg, Jakarta

Indonesian shares ended lower on Monday, led by selling in
food producer Indofood Sukses Makmur on worries the company may
delay its plan to sell a stake in its flour unit to the public
this year, dealers said.

They said overall sentiment was weak, hurt by losses in most
Asian markets and renewed fears that the rupiah may continue to
weaken due to rising dollar demand from local companies to repay
foreign debts by the end of the month.

The dollar was trading at Rp 9,663, up from its previous close
at Rp 9,650, on rising dollar demand from local companies to meet
offshore obligations by the end of this month.

"These factors sent negative sentiment to the market, spurring
further profit taking," said trader with Paramitra Securities.

The Jakarta Stock Exchange's Composite Index ended down
1.4percent , or 15.769 points, at 1119.898.

Decliners led gainers 89 to 25 with 60 stocks unchanged.
Volume was 900 million shares valued at Rp 751 billion, compared
with 1.1 billion shares, worth Rp 756 billion on Friday.

Indofood fell 4.2 percent to Rp 1,120 on expectations the
company will delay its plan to sell up to 15 percebt of Bogasari
Flour Mills through an initial public offering this year, citing
unfavorable market conditions.

On the downside, bellwether Telkom dropped 1.5 percent to Rp
4,900 on profit taking and after Telkom's shareholders appointed
Arwin Rasyid, a former banker, as president director.

Profit taking also hit shares of gas producer Perusahaan Gas
Negara, which lost 9.8 percent to end at Rp 3,000, and automotive
company Astra International, which fell 1.9 percent to Rp 12,800
after gains last week.

Bank Negara Indonesia fell 3.4 percent to Rp 1,700 on worries
it will book lower first-half earnings due to higher loan
provisions.

Shares in oil and gas producer Medco Energi bucked the trend,
closing up 1.3 percent at Rp 3,825 on expectations of improved
first-half earnings on the back of rising oil prices.

Dealers said they expect shares to trade lower Tuesday on
further price corrections in select blue chips.

The Indonesian rupiah ended slightly lower on Monday on dollar
demand from local companies ahead of the month end to pay
maturing offshore obligations, dealers said.

The dollar closed at Rp 9,663, up from its close on Friday at
Rp 9,650.

Dealers said that state-owned oil company Pertamina was the
main dollar buyer as the company is boosting its fuel reserves
after a recent fall due to cash-flow crunches.

Last week, the government gave the company around Rp 9
trillion in cash, likely to be used to buy dollars to finance
imports.

Dealers said trading volume continued to diminish ahead of
implementation of Bank Indonesia's new rule on July 14 to curb
speculation in the local foreign-exchange market.

"Trading volume has dried out to between US$200 million and
$250 million in the spot market currently, from between $400
million and $450 million before the central bank announced the
new forex trading rule earlier this month," a dealer with a
foreign bank said.

Next month, Bank Indonesia will implement a regulation to
restrict the amount of dollars banks can borrow from offshore
without underlying transactions to $1 million. Previously, there
was no cap.

Central bank officials have said the move is aimed at reducing
the amount of speculative offshore money coming into Indonesia,
which can destabilize the exchange rate.

Dealers expect the dollar to trade between Rp 9,645 and
Rp 9,680 on Tuesday.