Stocks rise on reports of Cabinet reshuffle

Stocks rise on reports of Cabinet reshuffle

Naila Firdausi and Arijit Ghosh, Bloomberg/Jakarta

Indonesia's key stock index surged to a 16-week high on reports that President Susilo Bambang Yudhoyono may name former Minister of Finance Boediono to his economic team. PT Telekomunikasi Indonesia (Telkom) rose.

Stock gains were "about the cabinet reshuffle and about Boediono being named a minister," said Cholis Baidowi, who helps manage the equivalent of US$1.2 billion at PT Trimegah Securities in Jakarta. "If Boediono comes back it will help improve coordination among ministers."

The Jakarta Composite Index climbed 23, or 2.1 percent, to 1119.41 at the 4 p.m. local time close, the highest since Aug. 12. Gaining stocks led decliners 97 to 20.

The measure had the biggest fluctuation among equity markets included in global benchmarks. It rose 4.2 percent this week, its biggest weekly gain since the period ended Sept. 30.

Telkom, Indonesia's biggest company, led gains. The shares rose Rp 100, or 1.8 percent, to Rp 5,550. PT Astra International, the nation's biggest car retailer, added Rp 300, or 3.2 percent, to Rp 9,550. PT Bank Mandiri, the biggest lender by assets, surged Rp 70, or 5.3 percent, to Rp 1,380.

Susilo said he plans to reshuffle his cabinet in the next two to three days as his administration looks for ways to boost economic growth.

"Boediono is seen by markets as a very solid technocrat and one that would continue to maintain policy settings," Ong Sin Beng, an economist at JPMorgan Chase & Co. in Singapore, said in a note to investors. "This is seen to be a positive move and could reinforce the constructive view on Indonesia."

Stocks also rose after the government said it expected the rupiah to strengthen, raising expectations a stronger currency will help cut costs at companies that import components and have dollar-denominated debt.

"A stronger rupiah will benefit Indonesian companies as it will cut costs," said Prayoga Triyono, head analyst at PT Henan Putihrai in Jakarta.

The rupiah may range between 9,600 and 9,800 against the dollar within six to 12 months, Minister of Trade Mari Pangestu said in a telephone interview. The currency, which has fallen 7.3 percent this year, was at Rp 10,003 a dollar at 3:58 p.m. local time.

PT Bumi Resources, Indonesia's biggest coal exporter, climbed Rp 20, or 2.9 percent, to Rp 710. The company will sell 45 million metric tons of coal this year, 25 percent more than last year's sales of 36 million tons, the Tex Report said, citing the company. About 44 million tons have been sold at an average prices of $39.50 a ton, 27 percent more than the year-ago prices, Tex said.

PT Timah, the world's largest tin miner and refiner, rose Rp 50, or 2.9 percent, to Rp 1,780. Tin for delivery in three months on the London Metal Exchange jumped 5.5 percent on Thursday to $6,490 a ton, the highest close since Oct. 17.