Indonesian shares ended higher on Thursday as
sentiment was improved by gains in regional markets
and higher oil prices, one analyst said.
The
Jakarta Composite Index (JCI) rose 30.51 points, or
1.7 percent, to close at 1,828.85, with mining and
agricultural stocks again leading the pack.
Some
17.9 billion shares worth Rp 8.9 trillion ($854
million) changed hands. Advancers led decliners 141
to 64.
“Valuation-wise, I think share prices are a little
expensive after the [market’s] rally,” Santikno
Suherman, an analyst at PT Batavia Prosperindo,
said, noting that the global economy remained in a
downturn.
He
said he expected that the JCI would face a
correction in the near term because the current
rally did not suggest the beginning of a bull
market.
Suherman noted that the JCI began its climb in early
March as the rupiah gained strength against the US
dollar.
“Most
of the foreign investors were currency players, so
they only put their money here for short-term
gains,” he said, adding that some overseas players
had already pulled out of local banking stocks.
Miner
PT Aneka Tambang rose Rp 80, or 4.8 percent, on the
day to close at Rp 1,730; and PT Timah gained Rp 50,
or 2.9 percent, to finish at Rp 1,770.
PT
Bakrie Sumatera Plantations added Rp 70, or 11
percent, to Rp 700; while competitor PT PP London
Sumatra Indonesia rose Rp 350, or 5.7 percent, to Rp
6,450.
Among
the stocks bucking the wider market trend were PT
Telekomunikasi Indonesia, which shed Rp 100, or 1.3
percent, to close at Rp 7,750; and PT Bank Central
Asia, which fell Rp 50, or 1.5 percent, to Rp 3,350.
Rupiah may weaken to
9,700 in first quarter
Aditya Suharmoko , The Jakarta Post , Jakarta | Tue, 01/19/2010
10:19 AM | Business
The rupiah may weaken to Rp 9,700 per US dollar by the end of the
first three months of 2010 as investors buy dollars, in the light of
uncertainties on the global economic recovery, Standard Chartered
Bank said.
The dollar will bounce back in the first quarter of this year to be
followed by a consolidation in
the second quarter, before weakening in the second half this year as
the Western economies are predicted to stay weak for several years,
the UK-based bank said in a research report.
The rupiah is predicted to gain to Rp 8,900 per dollar by the end of
2010 as the economy expands at 5.5 percent, Callum Henderson, the
bank’s global head of foreign currency research, told a forum held
by Standard Chartered on Monday.
“There will be a question on valuation, and a question on recovery
[in the first quarter this year] ... It will be volatile for the
asset market and currencies in general,” he said.
Currencies are traded in the asset market.
The rupiah declined for a second day, its first back-to-back loss in
a month, as investors sold riskier assets after reports of losses at
the retail banking subsidiary of JPMorgan Chase & Co. and on reports
of the deteriorating financial position of the Greek economy,
Bloomberg reported.
The rupiah weakened 0.4 percent to 9,230 per dollar as of 3:25 p.m.
in Jakarta.
However, it has gained 1.7 percent this year after jumping a total
of 16 percent in 2009, and having reached a 17-month high of Rp
9,121 to the US dollar on Jan. 11.
A study by Bank Danamon said the rupiah may
strengthen to Rp 9,000 to the dollar in the near term, but then soar
to Rp 9,500 by the year’s end due to a combination of rising
inflation in Indonesia and in the expectation of global increases in
bank interest rates.
Standard Chartered senior economist Fauzi Ichsan predicted
Indonesia’s foreign exchange reserves would increase up to US$73
billion from $66.11 billion in December 2009, and that this would
help to strengthen the rupiah in terms of its value against the US
dollar.
Following the rupiah depreciation in the first quarter of this year,
the Jakarta Composite Index will also probably undergo a correction,
said Fauzi.
At the closing of trading on Monday the Jakarta Composite Index had
dropped 0.17 percent to 2,642.54, as reported by Bloomberg.
Fauzi also said the central bank would
probably raise its key policy rate by 100 basis points to 7.5
percent later this year as inflation might accelerate to 5.5 percent
later due to surging commodity prices.
“They may force the government to raise subsidized fuel prices and
the electricity base-tariff, although not within the first three
months,” he said.
Coordinating Economic Minister Hatta Rajasa said the government
would spend the Rp 38 trillion ($4,1 billion) budget surplus
accumulated from 2009 to stabilize administered prices (for example
of fuels, electricity and key commodities) and to boost
infrastructure projects.
“Inflation will be maintained at 5 percent although there is the
possibility of plus or minus [some degree of variation],” he said.
Finance Minister Sri Mulyani Indrawati said last week inflation
might rise as high as 5.5 percent due to surging commodity prices,
most notably rises in the price of fuel oil.
Standard Chartered estimated oil might be traded at between $80 and
$90 per barrel during this year.
Indonesian stocks, Asia’s most expensive,
are set to extend gains by as much as 4.6
percent in 2010 as faster economic growth draws
more overseas investors, the nation’s
second-largest state-owned fund said.
The
Jakarta Composite index may trade in a range
from 3,300 to 3,500, said
Kenny Soejatman, director of equity
investment at PT Mandiri Manajemen Investasi,
which manages about $1.9 billion in Jakarta. The
benchmark gauge has risen 32 percent this year,
the most among Asia’s 10 biggest markets.
Overseas investors bought a net 4.9 trillion
rupiah ($547 million) of Indonesian shares this
month, almost a third of the 15.7 trillion
rupiah purchased this year. Flows into emerging-
market equity funds and high-yield bonds reached
a six-week high in the week to Sept. 15, as
higher risk appetite sustained a global rally,
EPFR Global said last week.
“The market has been rising largely thanks to
liquidity,” Soejatman said in an interview in
Jakarta yesterday. “The market has been in a
much more forgiving mood about high valuations
because the expectation of growth is high.”
The stock index fell 0.6 percent to 3,343.34
yesterday. Shares gained this year as
Bank Indonesia kept its interest rate at a
record low to boost growth even as inflation
quickened. The central bank left the rate at 6.5
percent for 13 months as President
Susilo Bambang Yudhoyono targets an average
6.6 percent annual expansion through the end of
his term in 2014. Domestic consumption makes up
two-thirds of the economy.
Most Overvalued Sectors
Fund inflows helped push stock values to 35
times reported earnings, the highest level in a
year, making Indonesia Asia’s most expensive
stock market, data compiled by Bloomberg show.
“We suggest investors take profits in the
most overvalued sectors,” in Indonesia, Credit
Suisse Group AG strategists led by Sakthi Siva
wrote in a Sept. 16 report. Consumer staples,
consumer cyclicals and industrials are the three
most overvalued industries, based on a model
that compares prices to book values against the
return on equity, said Siva, ranked first for
equity strategy in Institutional Investor’s 2010
Asian poll.
Mandiri’s Soejatman said investors should buy
consumer stocks that aren’t expensive, such as
PT Gudang Garam, the nation’s second-biggest
cigarette maker. Gudang Garam is trading at 21
times estimated earnings, compared with 34 times
of
PT Unilever Indonesia, the nation’s biggest
detergent maker.
PT Astra International, the nation’s largest
company by market value, may also rise as its
businesses in the automotive, finance, palm oil,
and mining industries serve as a “proxy” to the
Indonesian economy, he said. The stock is
trading at 17 times estimated earnings.
“Consumer discretionary stocks remain
attractive because of the consumption story
that’s driven by credit expansion,” Soejatman
said.
Stocks
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