Stock index ends down, has biggest loss in 8 weeks

Stock index ends down, has biggest loss in 8 weeks

Naila Firdausi, Bloomberg, Jakarta

Indonesia's key stock index had its biggest drop in eight weeks after Bank Indonesia said the country's economic growth would slow in the fourth quarter. PT Bank Rakyat Indonesia and PT Gudang Garam led declines.

"The news is bad" for investor confidence, said Bambang Setiadi, who helps manage about US$205 million at PT Sinar Mas Sekuritas in Jakarta.

The Jakarta Composite Index lost 17.75, or 1.5 percent, to 1155.96 at the 4 p.m. local time close, the biggest slide since Oct. 19. Declining stocks led gainers 91 to 12.

PT Telekomunikasi Indonesia, the nation's biggest telephone company, and PT Indosat, the second biggest, dropped after Credit Suisse First Boston cut its ratings on the stocks.

Indonesia's economy will probably grow 4 percent to 4.5 percent from a year earlier in the fourth quarter, Hartadi Sarwono, deputy governor at Bank Indonesia, the nation's central bank, said today.

The growth would be slower than the pace recorded in the third p quarter. In the three months ended Sept. 30, Indonesia's $258 billion economy expanded 5.3 percent from a year earlier, the slowest pace in a year, as rising fuel costs and higher inflation and interest rates curbed consumer spending.

"Most still expect above 5 percent on-year pace in the fourth quarter, so that's below expectations, disappointing," said Prayoga Triyono, head analyst at PT Henan Putihrai in Jakarta. "That means less purchasing power, lower demand for goods and loans."

Bank Rakyat, Indonesia's fourth-largest lender by assets, declined Rp 100, or 3.3 percent, to Rp 2,975. PT Bank Mandiri, the largest, fell Rp 10, or 0.6 percent, to 1,610. Gudang Garam, the country's largest cigarette maker, slipped Rp 300, or 2.7 percent, to Rp 10,950.

PT Astra International, Indonesia's biggest auto distributor, lost Rp 300, or 2.8 percent, to Rp 10,300. The stock also fell after the company said, citing a motorcycle association, that motorcycle makers sold 28 percent fewer two-wheelers in Indonesia last month from October.

Telekomunikasi, or Telkom, lost Rp 150, or 2.5 percent, to Rp 5,900, its biggest slide since Oct. 19. Indosat dropped Rp 200 , or 3.6 percent, to Rp 5,400, its biggest slide since Oct. 24.

Colin McCallum and Siriporn Sothikul, Bangkok-based analysts at CSFB, cut Telkom to "underperform" from "neutral," saying the shares have "overshot fundamental valuation and earnings drivers," according to a research note published today and received via e-mail. They also lowered Indosat to "neutral" from "outperform," saying the stock "looks fairly priced."

The following stocks also rose or fell in Jakarta. Stock symbols are in parentheses after company names.

Nickel miners: Nickel for delivery in three months on the London Metal Exchange dropped 3.5 percent to $13,700 a metric ton yesterday, its third day of declines.

PT Aneka Tambang, a nickel and gold miner 65 percent owned by the government, lost Rp 125, or 3.7 percent, to Rp 3,250. PT International Nickel Indonesia, the local unit of the world's second-biggest nickel-mining company, Inco Ltd. (N CN), slipped 300 rupiah, or 2.3 percent, to 12,950.

PT Delta Djakarta, a beer producer, gained Rp 1,000, or 2.9 percent, to Rp 36,000 as investors bet the Jakarta provincial government will sell a stake in the company at a higher price. The Jakarta provincial government plans to sell all or some of its 26.3 percent stake in Delta, Investor Daily Indonesia newspaper said, citing Dani Anwar, a member of Jakarta's provincial parliament.

PT Indofood Sukses Makmur, the world's biggest maker of instant noodles, slid Rp 40, or 4.2 percent, to Rp 920. Indofood said yesterday it aims to boost its market share in Indonesia to more than 75 percent next year, compared with 73 percent in September, by offering customers deals such as a free pack for every five bought.

"It's tough for Indofood to win customers because of the competition," said Bimo Haryo Pamungkas, an analyst at PT Samuel Sekuritas Indonesia in Jakarta, who rates the stock "hold." "The promotion by offering a free package will reduce margins."

PT United Tractors, the heavy equipment unit of PT Astra International, dropped Rp 175, or 4.6 percent, to Rp 3,650. PT Mandiri Sekuritas downgraded the stock "neutral" from "buy" and cut 2006 net profit forecast by 7 percent to Rp 1.2 trillion.

United Tractors' management "believes that the combination of higher interest rate, lack of credit facility and lower coal price expectation will negatively affect heavy equipment demand," analyst Arief Budiman wrote in a report today.