Bloomberg.com November 18, 2008 Indonesia's Stock Index Declines as Rupiah Falls to Decade Low
By Berni Moestafa Nov. 18 (Bloomberg) -- Indonesia's key stock index dropped for a second day led by financial companies after the rupiah slumped to a 10-year low, stoking inflation and reducing the prospect of lower borrowing costs. PT Bank Mandiri lost 8.9 percent and PT Bakrie & Brothers fell by its trading limit after the value of its proposed sale of PT Bumi Resources slumped by half, threatening the deal. The rupiah weakened on concern overseas investors will avoid emerging-market assets as a global economic slump deepens. ``Confidence in the rupiah is a problem,'' said Fadlul Imansyah, a fund manager at Jakarta-based PT PNM Investment Management, which manages about $267 million in assets. And ``if interest rates don't come down, people won't ask for loans and that will slow the economy,'' The Jakarta Composite index fell 3.8 percent to close at 1,189.86, the lowest since Oct. 30. About 10 stocks fell for each that rose. Bank Mandiri, Indonesia's biggest by assets, slid 8.9 percent to 1,540 rupiah and PT Bank Central Asia, the largest by market value, dropped 3.7 percent to 2,625 rupiah. The rupiah declined as much as 3.2 percent to 12,225 per dollar, the weakest since September 1998, before trading at 11,860, versus 11,850 yesterday, according to data compiled by Bloomberg. A lower rupiah increases the cost of imported goods, adding to inflation. The central bank kept on Nov. 6 its key rate unchanged at 9.5 percent after six increases since May. Rupiah, Bonds The rupiah is the worst performer this month among Asia's 10 most-active currencies excluding the yen as a government report showed yesterday the economy grew 6.1 percent in the three months through September from a year earlier, the slowest pace in six quarters. ``The rupiah has been trying to break 12,000 all week as the markets see a protracted financial crisis,'' said Iwan Ridwan Gunandar, a currency dealer at PT Bank CIMB Niaga. ``Stocks are declining every day because of the global slowdown.'' Foreign investors have sold more Indonesian shares than they bought on all but four trading days this month, according to stock exchange data. Overseas investors cut their holdings in local bonds to 89.4 trillion rupiah ($7.5 billion) as of yesterday from 92.8 trillion rupiah at end-October, the finance ministry said on its Web site. Bonds fell, causing the yield on the 9.5 percent bond due in June 2015 to surge 40 basis points to 16.25 percent, according to closing prices at the Inter Dealer Market Association. The price dropped 13,065 rupiah per 1 million rupiah face amount to 73.338 Astra International, Indonesia's biggest auto retailer that sells Toyota Motor Corp. vehicles, fell 2.8 percent to 8,550 rupiah, on concern a weaker rupiah will increase import costs. PT Telekomunikasi Indonesia, the nation's biggest telephone company whose overseas debt accounts for 28 percent of the total, slid 5.9 percent to 5,550 rupiah. Bakrie & Brothers Bakrie & Brothers, an investment company controlled by the family of Indonesia's Welfare Minister Aburizal Bakrie lost 9.7 percent to 131 rupiah. Bakrie & Brothers resumed trading today after a six-week suspension. Bakrie is selling assets to repay $1.2 billion raised by pledging shares of among others Bumi, Asia's largest thermal-coal exporter. The drop in the value of the collateral may scuttle the deal should the buyer, an affiliate of U.S. buyout firm TPG, ask for a reduction in the price. Bumi, in which Bakrie & Brothers plans to sell a 35 percent stake, fell 9.5 percent to 950 rupiah. Bumi has lost 56 percent since Bakrie & Brothers announced the planned sale on Nov. 1. The coal mining company also dropped after crude oil for December delivery slumped 3.7 percent to $54.95 a barrel in New York yesterday, reducing the allure of alternative fuels such as coal and gas. PT Adaro Energy, Indonesia's second-biggest coal miner after Bumi, retreated 1.9 percent to 520 rupiah. PT Perusahaan Gas Negara, the nation's No. 1 gas distributor, declined 5.9 percent to 1,590 rupiah. To contact the reporter on this story: Berni Moestafa in Jakarta at [EMAIL PROTECTED] Last Updated: November 18, 2008 04:59 EST http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aIPLSgLse8Oo © 2008 BLOOMBERG L.P. ALL RIGHTS RESERVED.
