Shares hit new high on Sampoerna gains

Shares hit new high on Sampoerna gains

Dow Jones, Jakarta

Indonesian shares ended at a record high on Monday, led by gains in cigarette maker HM Sampoerna on news that Philip Morris International Inc. will buy a 40 percent stake in the country's third-largest cigarette maker, dealers said.

The stake purchase of Sampoerna fueled massive buying in many other blue chips as it reflects investors' confidence over the outlook of the nation's economy, they said.

Laksono Widodo, the head of research department at Macquarie Securities in Jakarta, said the deal reflects a vote of confidence in the country, especially in the consumer sector.

The Jakarta Stock Exchange Composite Index ended up 15.435 points, or 1.4 percent, to hit a closing record high at 1123.48.

Gainers led decliners 84 to 40, with 74 stocks unchanged.

Volume was 2.3 billion shares valued at Rp 2.8 trillion, compared with 2.7 billion shares valued at Rp 1.5 trillion on Thursday. Indonesian markets were closed Friday for a holiday.

HM Sampoerna jumped 18 percent to Rp 10,450 on news that Philip Morris will pay Rp 10,600 a share for the 40 percent stake. Dealers also attributed buying in Sampoerna to expectations that the company will perform better after the acquisition.

Indonesia's largest cigarette maker and Sampoerna's competitor Gudang Garam rose 13 percent to Rp 18,400.

Also higher were shares in gas and oil producer Medco Energi, which rose 7.5 percent to Rp 2,825 on expectations of higher 2005 earnings due to rising oil prices.

Telecommunications stocks, however, fell on worries of disappointing 2004 earnings.

Indonesia's largest phone company Telekomunikasi Indonesia fell 2.8 percent to Rp 4,300, and its rival Indosat edged down 1 percent at Rp 5,050.

Dealers expect the market to trade higher on Tuesday on follow-through buying in cigarette blue chips and a rebound in telecommunication stocks.

The rupiah ended lower on dollar demand from local companies, likely to hedge offshore obligations, dealers said.

The dollar ended at Rp 9,375, up from its close on Thursday at Rp 9,350. The local currency market was closed Friday for a public holiday.

Demand from local companies lifted the U.S. currency to an intraday high of Rp 9,400. The central bank stepped in the prevent the dollar from rising further, dealers said.

Dealers said news that Philip Morris will buy a 40 percent stake in HM Sampoerna for around $1.9 billion has had little impact on the local currency.

"It's not yet clear how it will settle the deal," a dealer with a foreign bank said.

Still, the news is another sign of improving sentiment from foreign companies toward Indonesia.

Dealers said the government's acceptance of an offer from the Paris Club for a $2.6 billion debt moratorium for this year is another factor that could help the local unit once corporate demand for the greenback eases.

The dollar is expected to trade between Rp 9,350 and Rp 9,400 on Tuesday.