Stock index rises to 16-Week high on Cabinet shuffle

Stock index rises to 16-Week high on Cabinet shuffle

Naila Firdausi, Bloomberg/Jakarta

Indonesia's key stock index climbed to a 16-week high as investors bet Boediono, who was named chief economics minister in a cabinet shuffle on Monday night, will control inflation and attract investment. PT Astra International and PT Gudang Garam led the gains.

Boediono "seems to be very clean," said Bruno Vanier, who counts Indonesian stocks among the US$1 billion of Asian equities he helps manage at Edmond de Rothschild Asset in Paris. "The market is welcoming the news."

Stocks also gained after the nation's central bank raised its key interest rate less than some economists had expected. PT Bank Permata and PT Bank Mandiri led gains among lenders.

The Jakarta Composite Index added 2.86, or 0.3 percent, to 1123.44 at the 4 p.m. local time, its highest since Aug. 12. Gaining stocks led decliners 61 to 52.

President Susilo Bambang Yudhoyono also named State Minister of National Development Planning Sri Mulyani Indrawati as finance minister, replacing Jusuf Anwar. Coordinating Minister for the Economy Aburizal Bakrie will become Coordinating Minister for People's Welfare.

Astra, Indonesia's biggest auto distributor, climbed Rp 250, or 2.7 percent, to Rp 9,650. Gudang Garam, the biggest cigarette maker, added Rp 150, or 1.4 percent, to Rp 11,000. PT Unilever Indonesia, the country's biggest maker or food and soap, rose Rp 75, or 1.7 percent, to Rp 4,450.

Boediono, who will be sworn in as the top economic minister on Wednesday, said Indonesia must boost investment to help its economy grow at a faster pace, while maintaining efforts to stem inflation.

Indonesia's inflation in November was at a six-year high of 18.4 percent, after a 17.9 percent gain in October following the government's fuel prices increase on Oct. 1.

Boediono has a doctorate in economics from the University of Pennsylvania's Wharton School. During his three-year tenure as finance minister in former President Megawati Soekarnoputri's cabinet, inflation slowed to 4.6 percent in February 2004 from 15.13 percent in February 2002.

"Markets see Boediono as a person with respectable achievements," said Eli Djurfanto, head of portfolio management at ABN-Amro Asset Management Indonesia in Jakarta, which manages about $352 million. "He cut inflation and reduced the budget deficit when he was finance minister."

Bank Indonesia on Tuesday raised the interest rate used as a reference for bill sales by half a percentage point to 12.75 percent, less than the 13.25 percent median forecast of 10 economists in a Bloomberg survey.

"The less than expected increase generates positive sentiment for stocks," said Alvin Pattisahusiwa, who helps manage about $200 million at Fortis Investments in Jakarta.

Bank Permata, a lender partly owned by Standard Chartered Plc, jumped Rp 90, or 18 percent, to Rp 600, its biggest gain since a 26 percent jump on June 29 last year. Bank Mandiri, Indonesia's biggest lender by assets, climbed Rp 20, or 1.5 percent, to Rp 1,400.

Elsewhere, PT Perusahaan Gas Negara (PGN) and PT Telekomunikasi Indonesia (Telkom) declined as investors judged their gains in the previous two days excessive. The Jakarta Composite has risen 2.5 percent since Dec. 2, when Susilo flagged the planned changes to his cabinet.

State gas distributor PGN fell Rp 300, or 4.3 percent, to Rp 6,650, its first decline in three days. Telkom, the nation's biggest phone company, slid Rp 50, or 0.9 percent, to Rp 5,600, ending a two-day, 3.7 percent, gain.

"Stocks have gone up quite a bit in the past few days," said Arfan Karniody, who helps manage about $150 million at PT Niaga Aset Manajemen in Jakarta. "I don't expect the gains to last."

Asian supplies of thermal coal, used by power plants, rose by 33 million metric tons this year, exceeding growth in demand, led by production from Indonesian mines, said coal research company the McCloskey Group. The price may remain weak next year, the research company said.

PT Bumi Resources, Indonesia's biggest coal exporter, slipped Rp 10, or 1.4 percent, to Rp 700. PT Tambang Batubara Bukit Asam, a state-run coal miner, lost Rp 30, or 1.7 percent, to Rp 1,710.

PT Semen Gresik, Indonesia's biggest cement maker by sales, rose Rp 100, or 0.6 percent, to Rp 18,000. Consolidated profit may rise 73 percent this year to Rp 900 billion ($90.7 million) because of increased efficiency and growth in demand, Koran Tempo newspaper reported, citing President Director Dwi Soetjipto.