Stocks gain as oil prices slide

Stocks gain as oil prices slide

Naila Firdausi, Bloomberg/Jakarta

Indonesia's key stock index climbed 1.7 percent, the biggest move among equity markets included in global benchmarks, after oil prices had their biggest drop in almost three months.

PT Telekomunikasi Indonesia (Telkom) and PT Gudang Garam led gains as concerns eased higher fuel costs will dent economic growth. Indonesia is the only member of the Organization of Petroleum Exporting Countries that is a net importer of oil.

"Lower oil prices will help the economy and boost investor confidence," said Cholis Baidowi, who helps manage the equivalent of US$252 million at PT Trimegah Securities in Jakarta.

The Jakarta Composite Index added 18.90 points to 1162.33 at the 4 p.m. local time close. The measure fell 1.4 percent last week, its first drop in five weeks. Gaining stocks led decliners 60 to 28. The index has gained 16 percent this year, set for its smallest gain in three years.

Crude oil for January delivery fell 3.2 percent to $58.06 a barrel in New York on Dec. 16, the lowest close since Nov. 30. It was the biggest decline since Sept. 23. The contract recently traded at $58.07 a barrel.

Oil prices have gained 27 percent in the past a year, prompting Indonesia to raise retail fuel prices twice as it tries to cap energy subsidies at Rp 89.2 trillion ($9 billion) this year. Companies pay for fuel based on international prices.

Lower oil prices "mean the rupiah may strengthen, costs at companies will fall while inflation may slow," Trimegah Securities' Baidowi said.

The rupiah rose 0.2 percent to 9,861 against the dollar at 4:46 p.m. Jakarta time. A stronger local currency cuts foreign debt and import costs for companies.

Telkom, the nation's biggest telephone company, gained Rp 300, or 5.3 percent, to Rp 6,000, ending a 7.3 percent, three-day drop. The company has about $850 million in overseas debt and imports most of its equipment. PT Indosat, the second biggest, added Rp 200, or 3.7 percent, to Rp 5,600.

Gudang Garam, the biggest cigarette maker, rose Rp 300, or 2.8 percent, to Rp 11,050, its first gain in four days.

PT Bumi Resources, Indonesia's biggest coal exporter that uses diesel for extracting and transporting the fuel, climbed Rp 20, or 2.6 percent, to Rp 780.

"Mining companies use a lot of fuel in their mining activities so lower oil prices will help them," said Christine Salim, head of research at PT Samuel Securities in Jakarta.

PT Aneka Tambang (Antam), a gold and nickel miner 65 percent owned by the government, jumped Rp 200, or 6.3 percent, to Rp 3,400. PT International Nickel Indonesia (Inco), a local unit of Canada's Inco Ltd., gained Rp 250, or 2 percent, to Rp 13,050, ending four days of losses.

Antam and Inco also rose as nickel gained for the first day in five. Nickel for delivery in three months climbed 2.8 percent to $14,000 a metric ton in London on Dec. 16, ending a four-day, 4.6 percent drop.

Infrastructure-related companies such as PT Indocement Tunggal Prakarsa advanced after Minister of Public Works Djoko Kirmanto said the country plans to spend Rp 18 trillion next year building roads, bridges and irrigation facilities.

Indocement, Indonesia's No. 2 cement maker by sales, gained Rp 125, or 3.6 percent, to Rp 3,575. PT United Tractors (UT), the biggest heavy equipment distributor, increased Rp 75, or 2.1 percent, to Rp 3,625.

"Indocement and UT will benefit from infrastructure spending and they are our top picks in the sector," said Samuel's Salim.

Elsewhere, PT Astra International, Indonesia's biggest auto distributor, climbed Rp 100, or 1 percent, to Rp 10,150, its first gain in three days. PT Serasi Autoraya, its shipping unit, has spent $10 million this month buying ships to expand, Investor Daily Indonesia reported, citing Hindra Tanujaya, a spokesman at Serasi.