Stocks climb after BI ups key rates

Stocks climb after BI ups key rates

Naila Firdausi, Bloomberg/Jakarta

Indonesia's key stock index closed at its highest in almost 17
weeks after the central bank raised interest rates less than some
economists had expected. PT Bank Rakyat Indonesia (BRI) and PT
Astra International paced gains.

Stocks also advanced after the rupiah climbed to its strongest
level in almost four months on speculation the appointment of new
ministers will spur economic growth.

The Jakarta Composite Index climbed 27.93, or 2.5 percent, to
1151.37 at the 4 p.m. local time close, its highest close since
Aug. 12. The gain, the biggest jump since Sept. 30, was the
biggest fluctuation among indexes included in global benchmarks.
All nine industry groups rose.

Bank Indonesia on Tuesday raised a key interest rate 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
increase was less than a 1.25 percentage point rise on Nov. 1.

"Investors are responding positively to the less-than-
expected increase, which signals the central bank won't be too
aggressive in raising rates," said Winston Sual, who helps manage
about $101 million at Panin Asset Management in Jakarta.

BRI, Indonesia's fourth-largest lender by assets, added Rp 75,
or 2.6 percent, to Rp 3,000. Astra, the nation's biggest auto
distributor that sells most of its cars and motorcycles through
loans, climbed Rp 350, or 3.6 percent, to Rp 10,000, the highest
close since Sept. 19.

PT Bank Mandiri, the country's largest lender, jumped Rp 90,
or 6.4 percent, to Rp 1,490, the biggest advance since Aug. 30.
Credit Suisse First Boston analyst Roger Lum raised the stock to
"outperform" from "neutral".

The rupiah gained as investors bet new ministers will
introduce policies to control inflation and boost investment.
President Susilo Bambang Yudhoyono on Wednesday swore in former
minister of finance Boediono as chief economics minister while
state minister of national development planning Sri Mulyani
Indrawati moved to the finance portfolio.

The rupiah rose to as high as 9,823 a dollar, its strongest
since Aug. 12. It was at 9,826 a dollar at 4:18 p.m. The currency
has gained 2 percent against the dollar while the Jakarta
Composite has climbed 5 percent since Susilo flagged the planned
changes to his cabinet on Dec. 2.

"Investors are optimistic the new economic team can deliver on
their low inflation promise," said Raymond Gin, who helps manage
the equivalent of US$800 million at PT Manulife Aset Manajemen
Indonesia in Jakarta. "The large and liquid stocks are the best
to invest in as they are interest rate-sensitive."

PT Telekomunikasi Indonesia (Telkom), the nation's biggest
telephone company, gained Rp 200, or 3.6 percent, to Rp 5,800,
the highest close since July 22, on expectations a stronger
rupiah will cut the cost of servicing foreign debt. The company
has about $850 million in dollar debt.

PT Indofood Sukses Makmur, the world's biggest maker of
instant noodles, increased Rp 60, or 6.7 percent, to Rp 950, its
biggest gain since a 7.6 percent jump on Sept. 9. A stronger
local currency will reduce the cost of importing ingredients such
as wheat.

"Investors see the new cabinet as committed to curbing
inflation," said Budi Budar, who helps manage about $91 million
in assets at PT NISP Sekuritas in Jakarta. "That helps the rupiah
and improves corporate earning outlooks."

More than 2 billion shares worth Rp 1.67 trillion ($170
million) changed hands on Wednesday, almost double the three-
month daily average trading value of Rp 850 billion.