Stock index hit record high, Telkom leads gainers

Stock index hit record high, Telkom leads gainers

Dow Jones, Jakarta

Indonesian shares ended higher on Tuesday led by earnings
inspired gains in bellwether Telekomunikasi Indonesia, which
drove the main index to end at a fresh record high, dealers said.

They said the firmer rupiah against the U.S. dollar and gains
in many Asian markets improved sentiment on the local bourse
after the main index fell in the previous two sessions due to
profit taking.

"The market recovered quickly from recent falls and many
investors now expect the main index to test the important level
of 1,200 later this week," said a trader with Andalan Artha
Advisindo.

The Jakarta Stock Exchange's Composite Index ended up 0.9
percent, or 11.10 points, to hit an all-time closing high of
1,189.33.

Gainers led decliners 77 to 32, with 90 stocks unchanged.
Volume, however, fell to 1.35 billion shares valued at Rp 1.12
trillion, compared with 1.55 billion shares valued at Rp 1.33
trillion on Monday.

Telkom rose 3.6 percent to Rp 5,700 after posting strong first
half earnings and also on renewed expectations that the company
could weather stiffer competition in the wake of Hutchinson
Telecommunications International Ltd.'s plan to enter the
Indonesian market.

"A new entrant wouldn't pose a big threat to Telkom (as) it
would be difficult to expand a network and build market share
here," said UBS Securities in a research note.

UBS upgraded Telkom's price target to Rp 6,300 from Rp 5,800,
reflecting an increase in subscribers forecast for this year.

Dealers also bought shares in paper producer Pabrik Kertas
Tjiwi Kimia, which rose 7.3 percent to Rp 3,325, after the
company said its first-half net profit rose by more than five
times to $24.91 million.

Elsewhere, Bank Central Asia added 2.8 percent to Rp 3,725 on
expectations that the government will proceed with its plan to
sell a 5 percent stake in the bank later this year.

On the downside, Bank Rakyat Indonesia fell 1.5 percent to Rp
3,250 on swift profit taking after rising 3 percent on Monday.

Dealers said they expect Indonesian shares to trade higher on
Wednesday, led by followthrough buying in Telkom.

Meanwhile, the rupiah closed higher against the greenback due
to monthly cyclical slowing in domestic corporate demand for
dollars, dealers said.

The dollar closed at Rp 9,745, compared with Rp 9,775 on
Monday.

A dealer at a foreign bank in Jakarta said that there was an
easing in local companies' appetite for dollars, which
traditionally peaks at the end of a month.

"Apparently the demand for dollars by onshore corporates has
been reduced quite a lot because they're usually buying from the
middle of each month to the end of the month," the dealer said.

The U.S. unit's regional weakening bias also helped the
rupiah, dealers said. The greenback lost ground against major
Asian currencies on Tuesday, including the yen, the won and the
New Taiwan dollar.

"The dollar is basically weakening against all regional
currencies, and the rupiah got some help from the renewed
strength of the Asian currencies," a dealer said.

Dealers expect the dollar to trade lower around Rp 9,725 on
Wednesday with resistance at Rp 9,800.