Shares end up at record high on blue chips

Shares end up at record high on blue chips

Dow Jones, Jakarta

Indonesian shares ended higher on Tuesday, with gains in certain bank and heavy equipment blue chips driving the main index to close at a new record high, dealers said.

The Jakarta Stock Exchange's Composite Index ended up 0.7 percent, or 8.253 points, at 1178.003. The main index on Monday fell 0.2 percent on profit-taking.

The market quickly recovered from yesterday's fall, proving that the underlying sentiment for Indonesian shares remained positive due to expectations of promising economic growth, said a trader with a local securities firm.

The government expects the economy to expand by 6.1 percent in 2005 from around 5 percent last year.

"If buying continues, the main index may test 1200-level very soon," said another trader with a foreign securities firm.

Gainers led decliners 78 to 47, with 69 stocks unchanged.

Volume rose to 1.5 billion shares valued at Rp 1.25 trillion, compared with 1.2 billion shares valued at Rp 1.16 trillion Monday.

Bank Danamon rose 3.8 percent to Rp 5,700, Bank Central Asia gained 2.1 percent to Rp 3,625 and Bank Negara Indonesia ended up 1.2 percent to Rp 1,650.

Dealers said investors bought these banks' shares on expectations of improved first-half earnings due to an increase in interest income.

Heavy equipment company United Tractors jumped 6.6 percent to Rp 4,450 on hopes of good first-half earnings due to an increase in its Komatsu branded tractor sales.

United Tractors sold 483 tractors in the first half, compared with 162 units in the corresponding period last year.

Analysts attributed the jump in Tractors' sales to promising development in infrastructure and mining sectors in Indonesia.

Elsewhere, oil and gas producer Medco Energi bucked the trend and fell 4.3 percent to Rp 3,350 on renewed worries that a controlling shareholder will sell a 30 percent stake on the Luxembourg bourse at a discount.

Dealers expect shares to continue to rise Wednesday on follow- through buying in bank blue chips.

The Indonesian rupiah ended slightly higher on Tuesday, with dealers saying the central bank may have intervened in the market to support the domestic currency.

The dollar closed at Rp 9,810 versus Rp 9,820 on Monday.

Healthy demand from local companies drove the dollar to an intraday high of Rp 9,835, dealers said, but state-owned banks sold the greenback likely on behalf of the central bank to support the local unit.

"The central bank is currently the single largest dollar supplier in the local currency market as dollar inflows from foreign market participants dried out," a dealer said.

Bank Indonesia imposed regulations earlier this month to curb participation of offshore market players to reduce volatility and trading volumes in the local unit.

The lack of asset sales by the government has also limited dollar inflows.

Dealers expect the dollar to trade between Rp 9,800 and Rp 9,820 on Wednesday.