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.