Tamed Inflation Boosts Local Market

By webadmin on 11:02 pm Sep 30, 2011
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JG, Antara & Reuters

Indonesia’s benchmark stock index rose for a fourth straight day on Friday, as investors continued to purchase shares of blue chip companies ahead of an inflation report that suggests that interest rate rises are not likely any time soon.

The Jakarta Composite Index gained 11.85 points, or 0.3 percent, to close at 3,549.03, gaining 3.6 percent for the week. The stock measure lost 7.6 percent for the month and tumbled 8.7 percent for the quarter.

More than 6.3 billion shares valued at Rp 12.1 trillion ($1.4 billion) were traded on the Indonesia Stock Exchange. Decliners outnumbered gainers, 117 to 94.

Reza Priyambada, an analyst at Indo Surya Asset Management, said investors were taking up the chance to buy Indonesian stocks at low prices, betting on the economy’s strong fundamentals.

On Monday, the Central Statistics Agency will release September inflation data. The median forecast of seven economists surveyed by the Jakarta Globe put the headline inflation rate for the month at 4.90 percent. In August, the consumer price index rose 4.79 percent from a year earlier.

That would be within the central bank’s inflation range of 4 percent to 6 percent, creating little pressure to shift the key interest rate from 6.75 percent.

Still, Reza said external factors, such as uncertainties over Europe’s mounting debt crisis, could put pressure on the JCI in the next couple of trading days.

Meanwhile, the rupiah added 0.1 percent to close at Rp 8,830 against the dollar on Friday. Analysts said the central bank’s intervention helped prevent the currency from depreciating during the recent sell-off.

“If the central bank does not heavily defend the rupiah, it will be hard for the currency to gain due to pressures from external factors,” said Johanes Ginting, a currency analyst at Monex Investindo Futures.