Jakarta Composite Index Breaks Another Record As Rupiah Hits 3-Year High

Jakarta Globe, Bloomberg, Reuters & JG | July 29, 2010

Investors keeping an eye on a screen showing their rising fortunes at the Indonesia Stock Exchange (IDX) in Jakarta. The JCI rose 39.34 points, or 1.3 percent, to close at 3,096.82, a record high for a third-straight day. Analysts say they expect they expect the index to keep heading up. (EPA Photo)

Jakarta. The market bulls on Thursday, pushed the benchmark stock index to a record high for a third-straight day and sent the rupiah surging to its highest level in three years as the strong economy and relatively high interest rates continued to attract funds from abroad.

The Jakarta Composite Index posted the biggest gain among major Asian stock markets on the day as some of the biggest companies reported healthy earnings, despite discouraging economic news from the United States on Wednesday.

The JCI rose 39.34 points, or 1.3 percent, to close at 3,096.82. Volume was unusually heavy, with 6.7 billion shares worth Rp 6.76 trillion changing hands. Gainers trounced losers 147 to 72.

The index has risen 22.2 percent this year, making it the best performer among Asia’s 10 biggest markets.

Meanwhile, the rupiah rose to its highest level since July 2007, trading at 8,973 to the US dollar as of the stock market’s close. The currency has appreciated 4.7 percent this year, after gaining 16 percent in 2009.

Brian Jackson, a Hong Kong-based senior emerging-markets strategist at Royal Bank of Canada, said he expected the exchange rate to reach 8,800 by the end of the year.

“Foreign investors are very positive toward Indonesia and they like the medium- to long-term growth story,” he said. “Inflation is picking up and we expect the central bank to raise rates by 50 basis points in the second half. The higher yield should further support the rupiah.”

Among outperformers on the stock market, PT Astra International, the country’s biggest listed company, climbed 3 percent, hitting a record Rp 52,800 after its first-half net profit rose 50 percent due to surging auto sales and higher coal prices.

Astra, controlled by Singapore’s Jardine Cycle & Carriage, reported a net profit of Rp 6.44 trillion ($715) in the first half. This compares with a net profit of Rp 4.24 trillion in the same period last year. Analysts forecast a full-year result of Rp 12.5 trillion.

Consumer goods firm PT Unilever Indonesia rose 3.6 percent and instant noodle maker PT Indofood Sukses Makmur gained 5 percent as the consumer sector entered a period of high earnings in the July-September quarter, dealers said.

PT Bank Central Asia, the country’s biggest lender by market value, said its first-half profit rose 20 percent as strong domestic demand lifted its loan growth.

BCA, controlled by conglomerate Djarum Group, said it earned Rp 3.9 trillion in the first half, which compared with a net profit of Rp 3.3 trillion for the same period last year.

BCA’s shares closed up 3.3 percent at Rp 6,200 before the company released its results. Its shares rose 23 percent in the first half, outperforming a 15 percent jump in the JCI, but underperforming the 28 percent rally for the biggest state lender, PT Bank Mandiri, in the same period.

Investors have pumped $414 million into local stocks this month, lifting net purchases for the year to $1.27 billion.

The government predicts the economy will expand 6 percent in the second half, after growth of 5.8 percent in the first six months, and economists surveyed by Bloomberg estimated that inflation reached 5.8 percent in July.

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