Stocks soar for second day, rupiah advances

The Jakarta Post ,  Jakarta   |  Wed, 10/15/2008 10:42 AM  |  Headlines

The Jakarta stock market gained for the second consecutive day Tuesday, boosted by the continued rebound in regional stock markets and buyback plans from state companies.

The Composite Index closed at 1,555.97 points, a 6.4 percent surge from a day earlier. According to Bloomberg, the increase was the highest daily gain recorded since Jan. 23.

The rupiah, which last week weakened past 10,000 per dollar for the first time in three years, gained for a second day. The rupiah rose 0.4 percent to 9,784 per dollar.

Among those whose stocks rose were state companies pledging to buy back shares, benefiting from a relax of regulation that allow them to do so without prior approval from shareholders. This move comes as the government attempts to shore up confidence following last week's rout, which saw the market lose more than 20 percent of its value.

Stocks of coal miner PT Tambang Batubara Bukit Asam (PTBA), nickel miner PT Aneka Tambang (Antam), gas distributor PT PGN, tin producer PT Timah, PT Telekomunikasi Indonesia (Telkom), and construction firm PT Wijaya Karya (Wika) all rose more than 9 percent.

Bukit Asam gained Rp 550, or 9.6 percent, to close at Rp 6,300, while Antam rose Rp 110, or 9.6 percent, to Rp 1,260. PGN surged 9.8 percent to close at Rp 1,910 as Timah gained by 10 percent to close at Rp 1,320.

Telkom rose Rp 650, or 9.9 percent, to Rp 7,250 as Wika jumped Rp 18, or 9.9 percent, to Rp 199.

Bukit Asam has allocated Rp 1 trillion to buy back its shares, while PGN said it had prepared Rp 450 billion.

The moves by state companies were followed by the private sector, led by PT Medco Energi Internasional, Indonesia's largest publicly traded oil company, which said it had allocated $100 million to buy back its shares, pushing up its share price by 9.5 percent to close at Rp 2,875.

The hefty gains scored by state companies led Sofyan A. Djalil, state minister for state enterprises, to ask the stock market authority for an increase in the trading limit, which stipulates that a share that rises or falls by 10 percent is subject to automatic rejection.

The Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) head, Fuad Rahmany, said Tuesday that the government would raise the limit to 15 percent, effective Wednesday.

In another move expected to further bolster market confidence, the House of Representatives' Commission XI overseeing financial affairs approved plans to use Rp 4 trillion in state budget funds to buy back shares in state companies.

Rp 2.5 trillion of the money will be obtained from the Government Investment Center (PIP) with the rest coming from the government's fund for the management of state-run companies, Finance Minister Sri Mulyani Indrawati told a press conference.

"It will be used carefully and in an amount based on the needs, and will not be against the mechanisms of the stock market," she said.

Shares of Bakrie & Brothers and its units -- whose meltdown last week helped push the market's main index further down -- are still suspended, as it is still negotiating the sales of its assets, including the shares of its units, in an attempt to raise $1.2 billion to pay its debts.

Other companies whose stocks rose in Tuesday's trading included Bank Mandiri and Bank Rakyat Indonesia (BRI), which rose by 8.1 percent and 9.5 percent, respectively.

Meanwhile, AFP reported that Asian stocks soared Tuesday, with Tokyo posting a historic rise above 14 percent.

Tokyo's Nikkei soared 1,171.14 points, or 14.15 percent, to end at 9,447.57, its largest ever percentage gain. Hong Kong added 3.2 percent, Seoul was more than six percent higher and Taipei was up 5.4 percent, while Singapore rose 2.5 percent.

Copyright © 2008 The Jakarta Post - PT Bina Media Tenggara. All Rights Reserved.