Stock index hits 44-month high

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".