Shares end lower on weak rupiah, bird flu

Shares end lower on weak rupiah, bird flu

Dow Jones, Jakarta

Indonesian shares ended lower for the second consecutive session
on Wednesday, hit by the rupiah's weakness against the U.S.
dollar and lingering concerns over the outbreak of bird flu in
the capital, dealers said.

The deadly virus, which has killed at least four people in
Indonesia, could quickly turn into an epidemic, Minister of
Health Siti Fadilah Supari warned on Wednesday, as two children
suspected of having the virus died.

The government scrambled to calm public fears, announcing
plans for mass culls of chickens in infected areas and firing the
country's chief of animal health control for allegedly failing to
control the bird flu outbreak.

"If the government fails to prevent the virus from spreading,
it may hurt investment in the country," an analyst with a local
securities firm said.

The Jakarta Stock Exchange Composite index ended down 1.1
percent, or 11.535 points, at 1044.056.

Decliners led gainers 86 to 28, with 59 stocks unchanged.

Volume was 1.1 billion shares valued at Rp 1.1 trillion,
compared with 932 million shares valued at Rp 1 trillion on
Tuesday.

The dollar was trading higher at Rp 9,215, compared with its
previous close of Rp 9,195, due to the dollar's rise after the
U.S.'s Federal Open Markets Committee increased interest rates.

Analysts said the weaker rupiah could hurt purchasing power
and push up costs of debt services for many Indonesian companies
that have sizable dollar debt.

News that Indonesia's foreign exchange reserves declined to
US$30.24 billion as of Sept. 15 from $31.15 billion a week
earlier gave the market an excuse to buy the dollar.

"Declining foreign exchange reserves will reduce Bank
Indonesia's power to intervene in the market to defend the rupiah
if it's under selling pressure," a dealer with a U.S. bank in
Jakarta said.

Leading decliners, automotive company Astra International
dropped 4 percent to Rp 9,500 on worries that it will book lower
2005 car sales due to consumers' weakened purchasing power.

Dealers said investors also continued to sell their shares in
banks on expectations of poor 2005 earnings due to high interest
rates.

Bank Danamon fell 2.4 percent to Rp 4,025, Bank Mandiri lost
1.4 percent to Rp 1,370 and Bank Rakyat Indonesia declined 1
percent to Rp 2,600.

Dealers said news that the government sold its 5.02 percent
stake in Bank Central Asia at a premium did not support the
market because it had already been factored in. The government
sold BCA shares at Rp 3,550, compared with its Tuesday close of
Rp 3,475. BCA was suspended from trading on Wednesday due to the
sale process.

Later this month, Indonesia's third largest mobile telephone
operator, Excelcomindo Pratama, will hold a $285 million initial
public offering which is expected to spark foreign investors'
interest, resulting in increased capital flows which would boost
the rupiah.

Bucking the trend, cigarette maker Gudang Garam rose 5.7
percent to Rp 11,200 on expectations the company will soon raise
product prices ahead of fuel prices increases early next month.

Dealers said they expect shares to trade slightly higher on
Thursday on bargain-hunting after declines over the previous two
sessions.