Stocks, rupiah buoyed by optimism over CGI talks
JAKARTA (JP): Market optimism that international lenders will provide a significantly larger loan to Indonesia this year continued to keep the rupiah and stock prices on the Jakarta Stock Exchange (JSX) buoyant yesterday.
Currency dealers said the market was bullish on the rupiah because of expectations that a positive outcome from the Consultative Group on Indonesia (CGI) meeting would propel the rupiah even higher.
"It's all from CGI. The market is almost certain that the CGI will meet Indonesia's demands for more funds to finance its economic restructuring program," a chief dealer with a local private bank said.
The rupiah strengthened 2.5 percent to close at 13,000 against the U.S. dollar on the Jakarta spot market yesterday, up from Tuesday's close of 13,500.
"If market expectations are realized, the rupiah will still have room to strengthen past 13,000 and test 12,500," the chief dealer said.
The CGI, a consortium of donor countries and multilateral lending agencies chaired by the World Bank, began its two-day meeting in Paris yesterday. The CGI is expected to lend Indonesia at least US$8 billion in this fiscal year.
Dealers said the rupiah was also supported by Bank Indonesia's move to start weekly auctions of one-month promissory notes (SBIs) yesterday.
Although the auction of one month SBIs raised only Rp 7 trillion (US$530 million) in public funds -- from an initial target of Rp 13 trillion -- it absorbed excess money out of some segments of the market.
Positive sentiment also spread to the local stock market, sending the main price index 0.3 percent higher at the close of trade yesterday.
The JSX Composite Index closed 1.565 points higher at 485.096. Turnover totaled 230.9 million shares valued at Rp 365.78 billion (US$27.8 million).
Head of research at Vickers Ballas Tamara, Noraya Soewarno, said the strengthening rupiah and optimism over the CGI meeting had stimulated speculative local investors to place buying orders on selected stocks.
"The dominant factor seems to be the CGI meeting, especially with the reentry of the Netherlands after being excluded by former president (Soeharto)," she said.
Despite the continuing gains, foreign investors remained on the sidelines because there were no fresh leads to draw them back into the market, stockbrokers said.
With the relative absence of foreign investors, local investors continued to dominate trading, targeting some big cap stocks with foreign exchange debts like cigarette maker PT HM Sampoerna and car manufacturer PT Astra International.
Astra closed Rp 50 higher at Rp 1,125 on 10.29 million shares changing hands. Sampoerna climbed Rp 475 to Rp 3,575 with 9.16 million shares traded, while competitor PT Gudang Garam gained Rp 300 to Rp 9,050 on 1.27 million shares traded.
However, the strengthening rupiah sparked arbitrage selling on dual-listed stocks like state satellite operator PT Indosat, state domestic telecommunications giant PT Telkom, and tin mining company PT Tambang Timah.
Indosat dipped Rp 275 to Rp 14,725 on 75,500 shares traded, while Telkom managed to book an Rp 25 gain, closing at Rp 4,375 on 11.99 million shares traded. Tambang Timah dropped Rp 525 to close at Rp 8,700 on 589,500 shares traded. (rid)