Stocks fall on rate concern; BRI, Astra lead declines

Stocks fall on rate concern; BRI, Astra lead declines

Bloomberg, Jakarta

Indonesian stocks slid, with the key index set to close at a two-
month low, after the country's benchmark interest rate rose to a
14-month high on Thursday.

PT Telekomunikasi Indonesia and PT Bank Central Asia led
declines on concern higher lending rates will damp consumer
spending and loan demand.

The yield on one-month Bank Indonesia bills, which is used as
a benchmark for rates, rose to the highest since February last
year as the rupiah weakened to a near-three-year low.

"The jump in the yield makes people expect interest rates will
rise further," said Wiman Kastami, who helps manage the
equivalent of US$311 million at Fortis Investments in Jakarta.
"Bank Indonesia has said it will defend the rupiah from declining
and that would be through higher interest rates."

The Jakarta Composite Index dropped 26.46, or 2.5 percent, to
1,044.48 at 1:48 p.m. local time, set to close at its lowest
since Feb. 8.

Stocks also fell after U.S. consumer prices last month rose at
the fastest pace since October, renewing concern the pace of
interest-rate increases in the world's largest economy will be
accelerated.

"People in the Indonesian market are increasingly concerned
about market risks, such as interest rates," said Ross Teverson,
who counts Telkom and Bank Central shares among the $3 billion he
helps manage for Standard Life Investments in Hong Kong.

Bank Central, the second-biggest lender, fell Rp 75, or 2.2
percent, to Rp 3,325. PT Bank Rakyat Indonesia, the fourth-
largest lender, dropped Rp 125, or 4.4 percent, to Rp 2,725.

PT Astra International, the biggest automobile distributor,
slid Rp 250, or 2.3 percent, to Rp 10,650. Most car purchases in
Indonesia are funded through loans.

Telekomunikasi, or Telkom, the nation's biggest telephone
company, fell Rp 100, or 2.3 percent, to Rp 4,325. The stock also
slid on concern a weaker rupiah will boost costs of importing
equipment and servicing dollar-debt. The company had $853 million
worth of dollar debt as of September, and imports most of its
equipment.

The rupiah slid 0.3 percent against the dollar to 9,616 at
1:19 p.m. local time, near a three-year low of 9,621 reached on
Thursday. It may depreciate to 9,630 in a day or two, said
Michael Preiss, senior investment adviser at Coutts Bank
(Schweiz) AG in Singapore on Friday.

The market closed on Friday for the commemoration of Prophet
Muhammad's birthday. The index is set to end the shortened week
4.7 percent lower, the biggest weekly decline since a 4.9 percent
drop in the period ended June 4.

PT Aneka Tambang, an Indonesian gold and nickel miner, lost Rp
75, or 3.3 percent, to Rp 2,200. Aneka cut its scheduled
ferronickel production for 2005 by 27 percent to 7,400 metric
tons compared with a previous target of 10,150 tons after
technical problems at a smelter. The shutdown of the company's
ferronickel smelter may last as long as six months, Aneka Tambang
said Thursday.

PT International Nickel Indonesia, the local unit of Canada's
Inco Ltd., fell Rp 650, or 4.8 percent, to Rp 12,950. First-
quarter profit dropped 31 percent to $50.9 million from $73.4
million the year before, the company said in a faxed statement in
Jakarta released late Thursday.