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.