Shares end lower on fuel price hike worries

Shares end lower on fuel price hike worries

Dow Jones, Jakarta

Indonesian shares ended lower on Monday on worries that the government's plan to sharply increase fuel prices next year would result in social instability and also hurt the financial performance of many companies, dealers said.

Analysts also said higher fuel prices could increase inflation, which in turn could lead to raised interest rates.

"Nothing much we can do here," said a trader with a European securities firm. He added that many investors were also consolidating their positions ahead of the Christmas and New Year holiday.

The Jakarta Stock Exchange Composite Index ended down 9.446 points, or 1 percent, at 935.784.

Decliners led gainers 75 to 34, with 76 stocks unchanged. Volume was 1.2 billion shares valued at Rp 1.2 trillion (US$132.83 million), compared with 1.8 billion shares valued at Rp 1.6 trillion on Friday.

Cigarette maker Hanjaya Mandala led the decliners, down 5.2 percent to Rp 6,400, and its rival Gudang Garam was 0.4 percent lower at Rp 12,950 on expectations that higher oil prices would increase the companies' operating costs.

Dealers said investors continued to sell bank stocks because of growing worries that the central bank may raise interest rates to stem inflation and defend the rupiah.

Bank Mandiri lost 2.7 percent to Rp 1,800, and Bank Central Asia dropped 1.9 percent to Rp 2,625.

Carmaker Astra International ended the session 2.1 percent lower at Rp 9,250, after the company said its November car sales fell 31 percent month-on-month.

However, Indonesian Satellite bucked the trend, gaining 1.8 percent to Rp 5,600 on bargain-hunting.

Dealers said they expect the market Tuesday to trade lower on further selling in cigarette blue chips.

Meanwhile, the rupiah closed lower on Monday on rising dollar demand from local importers, and as foreign investors switched their equity portfolios into the U.S. currency, dealers said.

The dollar finished at Rp 9,285, up from its close on Tuesday of 9,220.

"Healthy demand for the dollar came from local importers, such as food and oil importers, who prepared to increase imports ahead of upcoming Christmas and New Year holiday," a dealer said.

Dealers said dollar-rupiah trading also took a lead from the fall of Indonesian shares in the previous four sessions.

They said many foreign investors took profit by selling Indonesian shares. Foreign investors are expected to continue changing rupiah into the U.S. currency on expectations that the rupiah will weaken further ahead of the year-end.

"The fall on the stock market was negative for the rupiah," a dealer with a state-owned bank said.

Dealers expect the dollar to trade between 9,250 and 9,325 on Tuesday.