Stock index rises to 17-week high

Stock index rises to 17-week high

Soraya Permatasari, Bloomberg/Jakarta

Indonesia's key stock index rose to its highest in 17 weeks for a third day. PT Aneka Tambang (Antam) jumped to a record after Merrill Lynch & Co. raised its earnings forecasts for the miner on higher gold price estimates.

PT Telekomunikasi Indonesia (Telkom) and PT Indofood Sukses Makmur advanced after the rupiah climbed to a five-month high, raising optimism import costs of companies will drop.

The Jakarta Composite Index added 1.749, or 0.2 percent, to 1160.07 at the 4 p.m. local time close, the highest since Aug. 11. The index gained 3.6 percent this week, its fourth weekly increase.

Antam jumped Rp 250, or 8.7 percent, to Rp 3,125, its highest, after Merrill Lynch raised its 2006 earnings forecast for the company by 9 percent to Rp 759.7 a share, and 35 percent to Rp 649.2 a share for 2007.

"Merrill Lynch's global mining team has raised its gold price forecasts by 19 percent for 2006 and by 18 percent for 2007," Merrill's report said on Wednesday. Gold accounts for about a fifth of Antam's total revenue, the report said.

Merrill left this year's forecast of Rp 489.14 a share unchanged. It set a 12-month share price target of Rp 3,650, 17 percent higher than Friday's prices, and the stock a "buy."

Telkom rose Rp 50, or 0.9 percent, to Rp 5,850. Telkom and its biggest cellular unit PT Telekomunikasi Selular (Telkomsel) said earlier this year they plan to spend more than US$1 billion combined next year to expand coverage in the nation's 33 provinces. Most of the investments will be in U.S. dollars.

"The rupiah's strong gain is boosting sentiment, making Indonesian assets more attractive," said Adrian Rusmana, head of research at BNI Securities in Jakarta.

Indofood, the world's biggest instant-noodle maker, gained Rp 20, or 2.2 percent, to Rp 940. About 60 percent of Indofood's costs are linked to the dollar.

The rupiah rose 0.4 percent to 9,696 against the dollar as of 4:03 p.m. Jakarta time, its strongest since June 27.

Banks advanced after the central bank said on Thursday it may lower interest rates by the middle of next year as inflation is expected to slow.

PT Bank Internasional Indonesia, the nation's sixth-biggest bank, added Rp 10, or 6.9 percent, to Rp 155. PT Bank Permata, partly owned by Standard Chartered Plc, rose Rp 10, or 1.5 percent, to Rp 670. PT Bank Lippo rose Rp 30, or 2 percent, to Rp 1,570. Lower rates may boost demand for loans and help cut non performing loans at banks.

PT Astra Agro Lestari, Indonesia's biggest publicly traded plantation company, fell Rp 250, or 4.3 percent, to Rp 5,600 after Merrill put out a "sell" rating on the stock. The company's shares are over-valued given slowing output growth, the broker said in the report.

PT Astra International gained Rp 300, or 3 percent, to Rp 10,300 after Kompas newspaper reported that the government may revise down the luxury tax on vehicles to help the local auto industry, citing Industry Ministry Fahmi Idris.

PT Bank Negara Indonesia fell Rp 10, or 0.7 percent, to Rp 1,370. The third-largest Indonesian lender's profit this year may fall 35 percent to Rp 2 trillion because of the increase in interest rates and inflation, Bisnis Indonesia reported.