Stock index hits 44-month high
The Jakarta Post, Jakarta
Rising sharply for the third consecutive days, the Jakarta stock index hit on Friday its highest level in almost four years, thanks to regional gains and positive sentiment at home, dealers said.
The Composite Index hit a 44-month high on the day to close at 644.82 points, a 1.4 percent higher than Thursday's close, with 3.15 billion shares valued at Rp 1.37 trillion (US$163.6 million) exchanging hands.
The closing was lower than a fresh intraday high of 648.68 points.
While regional markets were stronger on Wall Street's gains, the day's heavy trading in local stocks was mainly because of the rising investor confidence on the country's economy, according to dealers.
"As confirmed by the recent upgrades by global rating agencies, investors acknowledge the country has a stable economic outlook," a dealer from a state-owned bank said.
On Wednesday, Standard and Poor's Ratings Agency upgraded the country's sovereign ratings by one notch to follow a recent similar action by Moody's Investors Services, showing again a vote of confidence on the economic progress that has been achieved by the country.
The Friday rise capped the index's superb rally throughout the year, which was also supported by the declining trend of Bank Indonesia's interest rate and a stable dollar.
The index has risen by more than 40 percent throughout the year, while the increase reached 3.7 percent over the past week alone.
Looking forward however, while the sentiment will remain bullish, corrections would likely stall the index's upward trend, the dealer said.
"At least for next week, there is going to be profit-taking actions, as investors need also to cash in their recent hefty gains, especially on certain blue chip shares," he said, without elaborating the preferred level.
On Friday, shares of Indosat, the country's second largest state telecommunications firm, led the gainers, rising by 5.4 percent to close at Rp 10,800.
Heavy buying of Indosat was prompted by its plans to soon merge its cellular subsidiaries, with approval from shareholders to be sought at an extraordinary general meeting next month.
Other big gainers were another state telecommunications firm Telkom and cigarette producer Gudang Garam, which rose by 1.6 percent and 4.4 percent, respectively.
Telkom rose by Rp 100 to close at Rp 6,300, as against Gudang Garam's Rp 550 to end the day at 12,900.
Among the losers was heavyweight Bank Central Asia (BCA), which fell 1.3 percent to Rp 3,850.
Meanwhile, the rupiah was unchanged at 8,375 per U.S. dollar on Friday. However, the prospect remained positive on rising confidence on the economy and expected flows of capital seeking for local assets.
Bank Indonesia deputy governor Aslim Tadjuddin told reporters on Friday that the local currency's strong footing lately should reflect market's awareness over the stable macroeconomics outlook.
Aslim said he would not be surprised if the rupiah headed toward the 8,200 level in near future.
Bank Indonesia has cited the current level of the local unit as "comfortable".