Shares slightly up on Medco, Mandiri gains

Shares slightly up on Medco, Mandiri gains

Dow Jones, Jakarta

Indonesian shares ended marginally higher on Wednesday as late foreign buying in gas and oil producer Medco Energi and a rebound in Bank Mandiri erased earlier losses, dealers said.

After staying in negative territory for most of the session, the Jakarta Stock Exchange Composite Index ended up 0.3 percent at 1,095.51. The main index had opened 0.5 percent lower, spooked by news of a small explosion outside a cleric's house on the outskirts of the capital.

"The main index rebounded as the explosion didn't cause casualties," said a trader with Andalan Artha Advisindo. She added that the underlying sentiment for Indonesian shares remains positive because of expectations of better economic growth this year.

The government expects the economy to grow by 6 percent in 2005, compared with 5.1 percent in 2004.

Decliners, however, slightly led gainers 47 to 46, with 74 stocks unchanged. Volume was 1.2 billion shares valued at Rp 899 billion, compared with 1.3 billion shares valued at Rp 1.1 trillion on Tuesday.

Medco jumped 4.4 percent to Rp 3,525 ahead of its plan to sell a stake of around 40 percent through a secondary offering on the Luxembourg bourse in the second half of this year.

Bank Mandiri, the nation's largest lender by assets, gained 2 percent to Rp 1,540 on further bargain hunting after sharp falls last week due to its poor first-quarter earnings.

Shares in gas producer Gas Negara were also higher, rising 8.1 percent to Rp 3,000 on expectations of improved first-half earnings due to an increase in sales.

Dealers said profit taking in bellwether Telekomunikasi Indonesia and Indonesian Satellite prevented the main index from rising further.

Telkom fell 1.1 percent to Rp 4,725 and rival Indosat dropped 1.9 percent to Rp 5,150.

Dealers said they expect the market to trade higher on Thursday led by a further rebound in Bank Mandiri.

Meanwhile, the rupiah closed lower on suspected dollar demand from state-owned oil company Pertamina to pay for petroleum product imports, dealers said.

The dollar closed at Rp 9,585, up from its close on Tuesday at Rp 9,550.

Dealers said that they suspected Pertamina to have bought the dollar via several state-owned banks.

Earlier on Wednesday, Bank Indonesia Governor Burhanuddin Abdullah said that Indonesia must try to regain its status as a net oil exporter to help alleviate the pressure on the rupiah. Abdullah said that high oil prices currently sustain dollar demand.

Dealers said that although news of a small explosion outside Jakarta was not the main reason for the dollar's rise, it nevertheless kept the market cautious as it underlines lingering security problems in the country.

Dealers expect the dollar to test Rp 9,600 on Thursday, but the central bank is expected to intervene around the level.

"We believe Bank Indonesia remains steadfast in preventing the dollar from rising above Rp 9,600," a dealers said, adding that Bank Indonesia likely sold dollars on Wednesday via state banks.