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.