Shares up on bargain hunting

Shares up on bargain hunting

Dow Jones, Jakarta

Indonesian shares ended higher on Wednesday as bargain hunters - primarily foreigners - bought back most blue chips that fell in the previous five sessions, dealers said.

They said sentiment on the local bourse got a boost from gains across Asian markets after the U.S. Federal Reserve's policy committee raised its key interest rate by the widely-expected quarter percentage point overnight.

"The rebound could also indicate that underlying sentiment for Indonesian shares remains positive," said an analyst with a local securities firm. He said the market still expects that the economy will perform better next year under the new government.

The Jakarta Stock Exchange Composite Index ended up 17.078 points, or 1.9 percent, at 939.151. The main index had fallen 6.5 percent in the previous five sessions due to profit taking and the depreciation of the rupiah against the U.S. dollar.

Gainers led decliners 95 to 25, with 66 stocks unchanged. Volume was 1.1 billion shares valued at Rp 1.1 trillion, compared with 1.5 billion shares valued at Rp 1.1 trillion on Tuesday

Bellwether Telekomunikasi Indonesia led gainers, rising 3.3 percent to Rp 4,750 on a rebound after falling 9.8 percent over the previous five sessions.

Telkom rival Indonesian Satellite rose 2.8 percent to Rp 5,500, also on a rebound.

Carmaker Astra International jumped 4.4 percent to Rp 9,400 on bargain hunting after falling 8.6 percent in the previous four sessions.

Shares in Bank Central Asia and Bank Rakyat Indonesia, however, succumbed to profit-taking. BCA fell 2.9 percent to Rp 2,550 and Bank Rakyat slipped 1 percent to Rp 2,375.

Dealers said they expect the market on Thursday to trade higher on follow-through bargain hunting.

Meanwhile, the rupiah closed higher against the dollar on Wednesday on suspected central bank intervention via state-owned banks, dealers said.

The dollar finished at Rp 9,260, down from its close on Tuesday at 9,335. The U.S. currency hit an intraday high of 9,370.

Analysts said Bank Indonesia needs to stop the rupiah from falling further to help curb imported inflation. In this way, the central bank doesn't have to raise interest rates, which could hurt the economy, they added.

Traders said they suspect the central bank sold dollars around the intraday high to prevent the U.S. currency from rising above 9,400, which would have been a fresh six-month high.

They said the dollar's fall Wednesday was also partly due to profit-taking after a recent rally, although demand for the U.S. currency from local corporate continued to limit the dollar's downside.

Dealers expect the U.S. currency to trade between 9,225 and 9,275 on Thursday.