T

he nation’s stock index finally broke a new historic-high level as it neared the 3,800 psychological mark on Wednesday after a four-month struggle to hit a new record, thanks to positive expectations on first quarter corporate earnings.

The benchmark Jakarta Composite Index (JCI) closed at 3,794.76, up 1.66 percent or 62 points from a day earlier, the steepest increase since February, the Indonesia Stock Exchange (IDX) data showed.

The index touched its latest high in December 2010 and saw massive sell-offs in January over inflationary concerns, but has begun to rebound after the central bank and government responded to investors’ concerns with tools and measures to keep inflation in check.

“The stronger index was supported by investors’ expectations over corporate earnings in the first quarter of 2011 which is expected to grow further,” the IDX said in a statement.

Corporate earnings are scheduled to be released by the end of this month.

Foreign investors bought Rp 1.79 trillion (US$206.28 million) worth of stocks in Wednesday’s trading and sold Rp 1.4 trillion, leaving the net foreign buy at Rp 385 billion.

Trading volume was relatively heavy, with Rp 5.68 billion shares changing hands with a total transaction value of Rp 5.9 trillion. The stock exchange’s trading on Wednesday brought the overall market capitalization up to Rp 3,384 trillion.

Finance and miscellaneous industry sectors led the gain, with four major banks — Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Central Asia (BCA) and Bank Negara Indonesia (BNI) — moving the market up as they contributed a total 24.5 percent to the index gain.

“Blue chip stocks were increasingly targeted by investors, especially banks leading stocks,” the bourse said.

Mandiri and BRI share prices jumped 5.97 and 5.6 percent on Wednesday, closing at Rp 7,100 and Rp 6,600, respectively.

BRI president director Sofyan Basir said Wednesday that the lender’s first quarter net profits may likely reach around Rp 4 trillion on the back of strong lending which is expected to grow by 18 to 22 percent during the first three months of this year.

Automotive giant Astra Internasional and the country’s largest telephone company Telekomunikasi Indonesia (Telkom) both contributed 10.6 percent to Wednesday’s index gain, trading at Rp 55,150 and
Rp 7,800, respectively.

Telkom’s share increase, analysts said, was a response to the company’s plan to buy back 2.07 percent of its floating shares at Rp 3 trillion, indicating that it was unlikely the share price would decline in the near future.

Telkom, the nation’s biggest telecommunications provider, will spend Rp 3 trillion to buy back 2.07 percent of its shares on the Indonesian Stock Exchange (IDX), it said in a statement released on Tuesday.

The capital inflows brought up the rupiah exchange rate up by 0.5 percent to Rp 8,648 per dollar as of 4:52 p.m. in Jakarta, the steepest gain in more than two weeks, Bloomberg reported.

Most major Asian shares also traded higher on Wednesday, with the MSCI Asia Pacific index advancing by 1.8 percent to 136.69 at 6:26 p.m. in Tokyo, its biggest gain since March 22, Bloomberg data showed. About five shares gained for each that fell on the 1,023-member gauge.

Japan’s Nikkei 225 Stock Average advanced 1.8 percent. Australia’s S&P/ASX 200 Index climbed 1.4 percent and New Zealand’s NZX 50 Index increased 1 percent. South Korea’s Kospi index rose 2.2 percent, the biggest gain among benchmark indexes in the region.

Hong Kong’s Hang Seng Index rose 1.6 percent while China’s Shanghai Stock Exchange Composite Index climbed 0.3 percent.

— JP/Esther Samboh