FINANCE - JCI Records Biggest Gain in 3 Months as Investors Make Up for Lost Time

Indonesia’s benchmark stock index shot up on huge volume on Wednesday, posting its biggest gain in more than three months as it played catch-up with regional markets after a long holiday.

The Jakarta Composite Index leaped higher by 126.14 points, or 3.9 percent, to a record high of 3,357.03. It was its steepest gain since May 26.
The market was closed for the Idul Fitri holiday from Sept. 8 through Tuesday. Analysts said investors were eager to buy Indonesian stocks following a raft of encouraging economic news in recent days.

“We’re catching up on regional market gains, with foreign buyers looking to Asia for growth,” said Fadlul Imansyah, who helps manage $200 million in assets at Jakarta-based CIMB Principal Asset Management.

Reports that topped economist estimates over the past week included US retail sales and Chinese industrial production, lending and retail. The European Commission also said this week that the region’s economy may grow almost twice as fast as forecast in 2010. Indonesia’s economy may grow 6 percent this year, President Susilo Bambang Yudhoyono said on Wednesday. That compares with growth of 4.5 percent last year.

Astra International, the country’s biggest listed company, jumped 8 percent to Rp 57,800, its highest in at least 19 years.

“Astra is attractive because its many businesses represent all the major sectors in Indonesia,” Fadlul said. The nation’s largest car retailer also has subsidiaries in the banking, palm oil and coal mining sectors.

Bumi Resources, the country’s largest coal producer, rose 6.4 percent. The miner on Sept. 7 revealed that Glencore International, the world’s largest commodities trader, has owned a stake in the company since June.

Bank Central Asia, the largest lender by market value, gained the most since March 17, rising 7.4 percent to a record Rp 6,500. The bank expects lending growth this year of more than 22 percent, its vice president director, Jahja Setiaatmadja, said on Tuesday.

BCA said in July that it may raise its 2010 loan-growth target to 20 percent from 15 percent.

International Nickel Indonesia, the nation’s biggest producer of the metal, climbed 4.6 percent to Rp 4,525, the highest since May 10. Nickel futures jumped 2.2 percent to $23,350 a metric ton in London on Tuesday, the highest close since May 4.

Edwin Sebayang, head of research at Bhakti Securities, attributed the rally to foreign buying and Indonesia’s low-interest rate environment.

“On the banking and auto move, market chatter says since this morning that most people in the market expect the central bank will continue to hold rates next month, which created excitement as Astra and the banks jumped,” he said.

The rally made the market Asia’s second-best performer this year, ahead of the Philippines and Thailand, respectively.

The rupiah was little changed at 8,983 per dollar as of the stock market’s close in Jakarta, after earlier climbing as much as 0.3 percent, according to data compiled by Bloomberg. The dollar rebounded from a 15-year low versus the yen after Japan intervened to weaken its currency for the first time since 2004.

“We suspect a coordinated intervention in currencies across Asia, including Indonesia,” said Aris Setiawan, a Jakarta-based foreign-exchange trader at Bank Chinatrust Indonesia. “We saw some activity by Bank Indonesia. It doesn’t want a volatile rupiah.”

Central banks intervene by buying or selling currencies to influence exchange rates. The yen tumbled 2.9 percent to 85.43 per dollar on Wednesday, the biggest drop in almost two years.

Government bonds rose, pushing the 10-year yield to the lowest level in a month, on optimism relatively high yields will draw funds from abroad. The rupiah erased gains as Japanese intervention to weaken the yen boosted demand for dollars.

The yield on the government’s benchmark 11 percent bonds due in November 2020 fell seven basis points to 7.95 percent, according to midday prices provided by the Inter-Dealer Market Association. Foreign funds increased their holdings of the nation’s debt by 61 percent this year to Rp 174.1 trillion ($19.33 billion) as of Sept. 3, Finance Ministry data show.

“The risk appetite for Indonesian bonds is getting better,” said Dino Nunuhitu, vice president at Indo Premier Securities in Jakarta. “We are seeing buying from offshore.”

Source : http://www.thejakartaglobe.com/business/jci-records-biggest-gain-in-3-months-as-investors-make-up-for-lost-time/396312 - Sept 15, 2010