Stocks fall as inflation climbs to six-year high
Stocks fall as inflation climbs to six-year high
Naila Firdausi, Bloomberg/Jakarta
Indonesian stocks fell after increased fuel costs sent inflation
to a six-year high last month. PT Bank Central Asia (BCA) and PT
Astra International led declines.
Bank Indonesia (BI) raised a benchmark interest rate to a
three-year high after the release of the inflation report.
"Inflation was way above my expectations and even beat Bank
Indonesia's estimate," said Irvin Patmadiwiria, head of research
at PT Batavia Prosperindo Aset Manajemen in Jakarta, which
manages about US$150 million in assets.
"Investors may want to sell their stocks" on interest-rate
concerns.
The Jakarta Composite Index slid 1.27, or 0.1 percent, to
close at 1,064.95. Declining stocks led gainers 49 to 33. The
stock market will be closed on Wednesday through Nov. 8 for the
Idul Fitri holiday.
Consumer prices in Southeast Asia's largest economy climbed
17.9 percent in October from a year earlier after a 9.1 percent
rise in September, the Central Statistics Agency (BPS) said on
Tuesday.
That's faster than the median forecast of 13.3 percent in a
Bloomberg survey and the highest since June 1999. The government
more than doubled fuel prices on Oct. 1 to cut subsidy costs.
BCA, the country's second-largest lender by assets, lost Rp
100, or 3.1 percent, to Rp 3,125 on concern higher rates will
damp loan demand. PT Bank Negara Indonesia, the third largest,
fell Rp 60, or 4.5 percent, to Rp 1,270.
PT Indocement Tunggal Prakarsa, the second-biggest cement
maker, slipped Rp 25, or 0.8 percent, to Rp 3,275 on concern
higher lending costs will slow demand for homes and commercial
buildings.
PT Astra International, Asia's largest auto retailer, fell Rp
50, or 0.5 percent, to Rp 9,250. The company sells most of its
cars and motorcycles through loans.
"Banks and other interest-rate sensitive companies will be
hurt the most," said Alvin Pattisahusiwa, who helps manage about
$196 million at Fortis Investments in Jakarta.
The index fell as much as 1.1 percent following the release of
the inflation figure. It narrowed its losses after the rupiah
strengthened following the central bank's decision to boost
interest rates.
The rupiah, which dropped 0.8 percent to a one month-low on
the inflation news, gained 0.1 percent to 10,105 against the
dollar.
PT Indosat, the second-largest telephone company, gained Rp
100, or 2.1 percent, to Rp 4,975 on optimism a stronger rupiah
will its foreign-debt burden of $378 million. PT Telekomunikasi
Indonesia, the biggest telephone company, rose Rp 50, or 1
percent, to Rp 5,050.
"BI has to raise rates to prevent the rupiah from sliding,"
said Adrian Rusmana, head of research at PT BNI Securities in
Jakarta.