Shares end sharply up on corporate profits

Shares end sharply up on corporate profits

Dow Jones, Jakarta

Shares closed sharply up at yet another fresh record high on Tuesday on a mixture of hopes of higher-than-expected full year corporate earnings and improving investor confidence toward Indonesia, dealers said.

These factors kept sentiment toward local stocks buoyant, defying earlier expectations of profit-taking, they added.

"The sustained rally reflected improving confident toward Indonesia after successful democratic elections earlier this year, which produced a new government," an analyst with a foreign securities company said.

Dealers said that local stocks were also beneficiaries of the dollar's global weakness as it will reduce costs for local companies that pay dollar-denominated debts.

The Jakarta Stock Exchange Composite index closed up 2 percent, or 19.028 points, at a new all-time high of 959.019. The index has now gained over 11 percent since the beginning of the month.

Gainers led decliners 106 to 38, with 80 stocks unchanged. Volume reached 2.3 billion shares valued at Rp 1.97 trillion.

Dealers said that investors were particularly keen on buying banking stocks on their improving performances amid the low domestic interest rate environment.

Indonesia's largest lender, Bank Mandiri, ended up 5.6 percent at Rp 1,875. The bank is expected to report its nine-month results Wednesday.

Bank Central Asia edged up 1.9 percent to Rp 2,750, Bank Rakyat Indonesia closed up 4.7 percent at Rp 2,225, and Bank Negara Indonesia gained 4.8 percent to Rp 1,625.

Bellwether stock Telekomunikasi Indonesia ended 1 percent higher at Rp 5,000, while its rival Indonesian Satellite Corp. rose 3.6 percent to Rp 5,800.

Automotive company Astra International gained 1.2 percent to Rp 8,600.

Tuesday's healthy rally has boosted optimism for further gains on Wednesday, but dealers warn that profit-taking may emerge.

Meanwhile, the rupiah ended steady in relatively quiet trading as the lingering bearish sentiment against the dollar mitigated the impact of dollar bids from local companies, dealers said.

The U.S. unit ended at Rp 9,006, little changed from its close on Monday at 9,000.

The greenback touched an intraday high of 9,025 on demand from local companies, which started to accumulate the U.S. currency for paying offshore obligations by the end of the month.

Offshore market participants took advantage of the dollar's rise to sell the unit on the back of bearish sentiment against the currency globally, dealers said.

"These two factors will likely continue to be the main trading factors in the dollar-rupiah market, which will leave the pair in a range-bound trade for the short term," a dealer with a European bank in Jakarta said.

Dealers expect the dollar to trade between 8,980 and 9,020 Wednesday, with the recent rally in the local stock market expected to help keep market sentiment positive on the rupiah.