Shares index hits record high

Shares index hits record high

Dow Jones, Jakarta

Indonesian shares ended sharply higher on Thursday, with sharp gains in telecommunication and bank blue chips driving the main index to close at a record high, dealers said.

They said foreign investors continued to buy blue chips after U.S.-based investment house Bear Stearns upgraded Indonesian equity to overweight from market weight.

Bear Stearns said in a research report that there has been "sufficient" progress on structural reforms in Indonesia.

Dealers said gains across the Asian markets after Wall Street's rally overnight also added to positive sentiment.

"These positive factors spurred buying almost across the blue chips board," said a trader with a foreign securities firm. He added that investors shrugged off news regarding bird-flu cases in the capital, trusting that the government has so far responded properly to threat of the disease.

The Jakarta Stock Exchange's Composite Index rose 16.858 points, or 1.5 percent, to hit a closing record high of 1157.514.

Gainers led decliners 88 to 47, with 69 stocks unchanged. Volume was exceptional at 2.5 billion shares valued at Rp 2.3 trillion, compared with 1.6 billion shares valued at Rp 955 billion on Wednesday.

Bellwether Telekomunikasi Indonesia jumped 3.8 percent to Rp 5,450 on growing hopes it will post solid first-half earnings due to an increase in revenue from its cellular services. Telkom's rival Indonesian Satellite gained 0.9 percent to Rp 5,550 on bargain hunting.

Bank Mandiri, the nation's largest bank by assets, rose 3.3 percent to Rp 1,580 on a rebound and expectations that it could reduce its non performing loans by applying more prudent banking practices.

Bank Danamon ended up 1.9 percent at Rp 5,350 and Bank Rakyat Indonesia gained 1.7 percent to Rp 2,975 on a rebound after falls early this week.

Traders said they expect Indonesian shares to continue their uptrend Friday led by follow-through buying in telecommunication and bank blue chips.

Meanwhile, the rupiah ended higher on Thursday as dollar demand from local companies eased, dealers said.

The dollar closed at Rp 9,800, down from Rp 9,845 on Wednesday.

Dollar demand from local companies has been robust recently due to an increase in imports.

State-owned oil and gas company Pertamina said on Thursday that it did not buy dollars from the market as its requirements for the week have been covered by the central bank.

Dealers said the easing dollar demand from local companies as well as the U.S. unit's correction against most Asian currencies helped trigger profit-taking by speculators.

"Most people (speculators) seemed to have been long of dollars. They then took profit today," said a dealer with foreign bank.

Dealers expect the dollar to trade between Rp 9,790 and Rp 9,830 on Friday.