Stock suffer biggest loss in 4 weeks

Stock suffer biggest loss in 4 weeks

Bloomberg, Jakarta

Indonesia's key stock index had its biggest loss in almost four weeks after a U.S. inflation report boosted concern the Federal Reserve will keep raising interest rates, pressuring the Asian nation's central bank to follow suit.

PT Astra International and PT Bank Central Asia led declines by the market's biggest stocks by value.

"The Fed will likely raise interest rates and the move will be followed by Asian central banks," said Bambang Setiadi, who helps manage about US$140 million at PT Sinar Mas Sekuritas in Jakarta. Higher interest rates are "the enemy of growth."

The Jakarta Composite Index lost 19.96, or 1.8 percent, to 1075.91 at the 4 p.m. local time close, the biggest decline since Sept. 22. Falling stocks led gainers 84 to 25.

The U.S. Labor Department said prices paid to factories, farmers and other producers jumped 1.9 percent last month. Economists had expected a gain of 1.2 percent in a Bloomberg News survey. The increase followed a 0.6 percent rise in August, as surging energy prices boosted raw-material costs.

Fed policy makers will next meet on Nov. 1 and will probably raise rates for the 12th straight time since June 2004 to 4 percent, according to 62 of 67 economists in a Bloomberg survey.

Astra, Indonesia's biggest auto distributor that sells most of its cars and motorcycles through loans, dropped Rp 300, or 3.1 percent, to 9,350, its biggest slide since Sept. 28.

Bank Central, the second-biggest lender by assets, fell Rp 75 or 2.2 percent, to Rp 3,275 on concern higher rates will boost costs to pay depositors and slow loan demand. PT Bank Rakyat Indonesia, the No. 4 lender, lost Rp 75, or 3.1 percent, to Rp 2,350.

Bank Indonesia, the nation's central bank, on Oct. 4 raised its benchmark rate to 11 percent, the highest in more than two years. The bank next meets on Nov. 15.

Bank Indonesia sold Rp 11.99 trillion (US$1.19 billion) in 28- day bills today. The yield, which serves as a benchmark for rates, was unchanged at 11 percent, the highest since April 2003.

PT Indosat led declines among telephone companies after reporting a decrease in the number of its subscribers in the third quarter.

Indosat, the second-biggest telephone company, fell Rp 150, or 2.7 percent, to Rp 5,400. Its customers decreased to 12.7 million as of Sept. 30 from 12.87 million in June, spokeswoman Strasfiatri Auliana said, citing a "higher churn rate." Churn is the rate at which cellular customers change service providers as a percentage of subscribers.

"The decline raises questions," about the industry, said Kennyarso Soejatman, who helps manage about $60 million at First State Investments Indonesia in Jakarta. Investors were wondering "whether it would be a new trend."

PT Telekomunikasi Indonesia, which controls the country's biggest cellular company, lost Rp 150, or 2.8 percent, to Rp 5,200. PT Excelcomindo Pratama slid Rp 75, or 2.6 percent, to Rp 2,800.

PT Perusahaan Gas Negara, the state-controlled gas distributor, fell for a second day, losing Rp 300, or 5.5 percent, to Rp 5,200.