Stocks strengthen as rupiah remains firm

JAKARTA (JP): Share prices rose slightly in the local market on Monday, bolstered by foreign investors' persistent buying of certain blue-chip stocks, as the rupiah remained stable against the U.S. dollar.

Stockbrokers said the firm rupiah and bullish sentiment in the regional markets had propelled the buying sentiment in the battered bourse.

The JSX Composite Index rose 0.8 percent, or 2.57 points, to close at 307.41, with transactions of 239.07 million shares worth Rp 259.20 billion.

The rupiah, which broke through the 9,000 level last week, was still relatively stable, trading at Rp 9,100 against the dollar, slightly lower than Friday's close of 9,050.

"The rise in stock prices was driven largely by domestic investors buying," an institutional sales broker with Trimegah Securindolestari said.

Brokers said a buying spree on certain stocks with relatively strong fundamentals -- including mining firm PT Aneka Tambang and pulp and paper producer PT Indah Kiat -- had kept trading activities active on Monday.

The stock price of mining firm Aneka Tambang rose Rp 50 to Rp 1,325, with turnover of 17.18 million shares. Indah Kiat edged up Rp 175 to Rp 1,800, with 12.71 million shares changing hands.

But brokers said the rise of the main index was capped in late trading by massive selling pressure on telecommunication firms to take profits on gains made in recent days.

The price of Telkom stocks fell Rp 125 to Rp 1,825 on 20.82 million shares changing hands, and PT Indosat fell Rp 50 to Rp close at 7,150, with 912,500 shares traded.

Losers led gainers 48 to 43, with 79 stocks unchanged.

Head of research of Paribas Asia Equity Joshua Tanja said the market ran out of steam at the close on Monday as foreign investors remained jittery due to the country's gloomy long-term economic and political outlook.

"Foreign investors with limited funds will soon leave our market due to unresolved problems here," he said.

Trimegah's stock brokers said that the sharp increase in stock prices last week would not persist because the rise was not supported by sound fundamentals of the debt-ridden companies in the local market.

Like stocks, the rupiah remained stable.

Currency dealers said the rupiah, which opened at 9,300/9,400, was traded in moderate dealings as most investors were not eager to enter the market.

Dealers said that limited dollar buying had caused the rupiah to decline slightly lower against the dollar on Monday.

"I think some investors made a dollar buying program which capped the rupiah improvement" a chief dealer with a local private bank said.

The dealer said persistent dollar selling by state banks had prevented the rupiah from falling further. (aly)