Shares index reaches fresh record high

Shares index reaches fresh record high

Dow Jones Jakarta

Indonesian shares ended at yet another fresh record high on Friday as investor sentiment toward local stocks stayed buoyant after Thursday's healthy rally, dealers said.

The Jakarta Stock Exchange's Composite Index rose 14.73 points, or 1.3 percent, to 1,172.24, after rising 1.5 percent on Thursday.

Bear Stearns earlier this week upgraded Indonesian equities to overweight from market weight, which dealers cited as one of the factors behind Thursday's rally. The U.S.-based investment house said in a report that there has been "sufficient" progress on structural reforms in Indonesia.

"Today's and yesterday's rallies were healthy as they were supported by robust trading volume," said a dealer.

However, volume dipped slightly, with 2.1 billion shares worth Rp 1.93 trillion changing hands on Friday, compared with 2.5 billion shares valued at Rp 2.3 trillion on Thursday.

Gainers led decliners 71 to 58, with 74 stocks unchanged.

Bellwether Telekomunikasi Indonesia (Telkom) rose 6.4 percent to Rp 5,800 on expectations it will report solid first-half earnings.

Its rival Indosat gained 3.6 percent to Rp 5,750. Indonesia's largest automotive group of companies, Astra International, edged up 2 percent to Rp 12,900.

Cigarette maker Gudang Garam, however, dropped 2.3 percent to Rp 13,000 as its sales are expected to be hurt by the government's decision to raise minimum cigarette prices to boost excise tax revenue.

The nation's largest lender by assets, Bank Mandiri, rose 0.6 percent to Rp 1,590, and the second largest bank, Bank Central Asia, fell 2.1 percent to Rp 3,500 on profit taking.

Dealers expect shares to continue rising on Monday, but warn that profit taking is looming.

Meanwhile, the rupiah ended also slightly higher on the dollar's slide against most Asian currencies following a revaluation of the Chinese yuan.

However, the rupiah failed to keep most of its intraday gains as dollar demand from local companies was healthy, dealers said.

The dollar closed at Rp 9,795, down from Rp 9,800 on Thursday.

The U.S. unit fell to an intraday low of Rp 9,710 in the morning, but the slide only whet the dollar appetite of local companies, which snapped up the currency to pay maturing offshore obligations, dealers said.

Dealers also said the rupiah's failure to stage a significant rally against the dollar could be a sign that the market believes Indonesia's economy is unlikely to benefit greatly from the yuan revaluation.

Some analysts had earlier expected the rupiah to rise significantly against the dollar, and eventually help ease domestic inflationary pressures.

On Friday, Indonesia's Senior Economic Minister Aburizal Bakrie said the revaluation of the yuan won't have a major impact on the Indonesian economy as the magnitude is small.

Dealers said that there is no sign yet that corporate dollar demand is abating.

"It looks very hard for the rupiah to rise significantly as corporate dollar need is still big," a dealer with a local bank said.

Dealers expect the dollar to trade between Rp 9,700 and Rp 9,850 next week.