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JCI Hits 2-Year High on Heavy Volume as Rupiah Reaches Pre-Crisis Levels
Yessar Rosendar | March 17, 2010

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The Jakarta Composite Index moved sharply higher on huge volume on Wednesday, closing at its highest level in two years after the US Federal Reserve pledged to keep interest rates low, prompting foreign funds to continue the buying spree they began last week.

Meanwhile, the rupiah surged to its highest level against the dollar since August 2008.

The JCI surged 86.65 points, or 3.25 percent, to close at 2,756.26, its highest close since Feb. 28, 2008.

Volume was heavy. Some 4.5 billion shares worth Rp 7.6 trillion ($836 million) changed hands.

Gainers outnumbered decliners 162 to 42.

Purwoko Sartono, an analyst from PT Panin Sekuritas, said the strong domestic economy and the news from the Fed provided a burst of buying momentum.

“In the short term, the foreign funds will continue to flow into the market,” Purwoko said.

The finance sector posted the biggest gain on Wednesday, rising 4.77 percent.

PT Bank Central Asia led gainers on expectations that 2009 earnings would be strong, leading to a dividend payout, analysts said. The country’s biggest bank by market value, BCA surged 12 percent to a record high Rp 5,800.

PT Astra International, the nation’s biggest auto retailer, jumped 5.7 percent to a record Rp 40,850 as a stronger rupiah reduces the cost of importing cars and parts.

The rupiah rose 0.7 percent to 9,115 against the dollar as of the stock market’s close on Wednesday, the highest level since August 2008, just prior to the outbreak of the global financial downturn.

Continued capital inflows into emerging markets, including Indonesia, boosted the currency, Bank Indonesia Deputy Governor Hartadi Sarwono said on Wednesday.

Faced with lower yields in Europe and the United States, foreign investment funds have been buying more local financial securities in the past week, including Bank Indonesia Certificates (SBI), government bonds and stocks in search of greater yields. These inflows have also contributed to the strength of the rupiah.

Among other stocks, PT Perusahaan Gas Negara, the state gas distributor, rose 4.3 percent after Standard & Poor’s raised the company’s credit rating by one notch to BB with a “positive outlook.” 



Bloomberg