Shares up on news of debt rollover plan

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) rose slightly yesterday after falling for two consecutive days on news of the rollover plan to tackle the country's mounting private debt crisis.

Brokers said share prices remained under selling pressure in the morning but bounced back slightly in late trade on news of the debt rollover plan.

News that leading banks from Europe, Japan and the United States had agreed to extend the payment of the principal of the country's corporate debt brought fresh wind to the Jakarta market.

The brokers said the positive debt news really ignited investor sentiment in the local exchange on expectation that such a plan would help Indonesian companies stay alive amid the economic crisis.

"News of the debt rescheduling plan by the international creditors really improved market sentiment," a broker with Trimegah Securities said.

The Nihon Keizai Shimbun newspaper reported yesterday that 13 banks from Japan, Europe and the United States were near to reaching a final agreement on solving Indonesia's mounting corporate debt crisis and would allow the Indonesian companies to postpone the repayment of the principal for six months.

"Such news will give local corporates a chance to restructure their foreign exchange debts," an analyst with WICarr Securities said.

The JSX Composite Index closed up 2.44 points to 504.10 yesterday on a total turnover of 503.82 million shares on the regular market valued at Rp 679.21 billion (US$80.83 million).

Brokers said that cigarette maker PT Gudang Garam led the gainers on expectation that it would book better than expected results for the first quarter of the year. Gudang Garam rose Rp 100 to Rp 11,175 on 2.2 million shares traded, food producer PT Indofood Sukses Makmur rose Rp 575 to Rp 3,300 on 28 million shares traded and PT HM Sampoerna rose Rp 75 to Rp 6,775 on 2.80 million shares traded yesterday.

As stock prices gained ground, the rupiah closed slightly higher against the U.S. dollar in moderate trading yesterday as the high interest rates in the domestic banking industry lured more capital inflows into the country, currency dealers said.

The currency ended the day at 8,400 against the American greenback, up 3 percent from its close at 8,600 the previous day.

Dealers said that most investors were bullish on the rupiah as they could benefit from the higher interest rates offered by the country's banks. (aly)