Rupiah, stocks rebound on positive news
Aditya Suharmoko, The Jakarta Post, Jakarta | Tue, 05/11/2010 10:19 AM | Business
The rupiah and stocks regained Monday as market confidence improved following Indonesia ’s strong economic growth report and the unveiling of measures to contain the European debt crisis.
The market also became more confident on the announcement of criteria for potential candidates to replace outgoing Finance Minister Sri Mulyani Indrawati, analysts said.
The Jakarta Composite Index jumped 4.1 percent, its steepest advance since June 24 last year, to close at 2,850.43 Monday.
Bank Central Asia, Indonesia ’s largest bank by market value, increased 5.6 percent and PT Astra International, the country’s biggest auto retailer, jumped 6 percent, providing the biggest boost to the composite index, Bloomberg reported.
The rupiah strengthened the most since September, gaining 1.6 percent to 9,081 per US dollar at 4:04 p.m. in Jakarta . It had fallen 2.3 percent last week.
Indonesia’s economy grew by 5.7 percent in the first quarter from a year earlier, the Central Statistics Agency reported Monday. This is the highest growth since the third quarter of 2008, when it grew 6.1 percent.
The European Union and the International Monetary Fund agreed to provide a ¤750 billion (US$969 billion) loan package to help countries in the Euro region pay their debts.
“Global factors were not too worrying. The market may be calmer because political parties said the replacement must be a professional. Fundamentally, there is nothing we should be worried about,” said Destry Damayanti, the chief economist at Mandiri Sekuritas.
Names touted as possible replacements for Mulyani include Bank Indonesia Senior Deputy Governor Darmin Nasution, Finance Ministry head of fiscal policy Anggito Abimanyu, Finance Minister director general of budgeting Anny Ratnawati, National Development Planning Minister Armida Alisjahbana, Investment Coordinating Board chief Gita Wirjawan and Bank Mandiri president director Agus Martowardojo.
Mulyani will serve the World Bank from June 1 as a managing director, the second-highest position, just under World Bank president Robert Zoellick.
Destry said Indonesian stocks were becoming more attractive after slumping last week.
“ China and India are already overheated, too expensive,” she said.
Purbaya Yudhi Sadewa, the chief researcher of Danareksa Research Institute, said the 5.7 percent economic growth report showed that Indonesia fundamentally remained strong.
“Investors in the stock market shouldn’t panic despite that the minister will be replaced,” he said.
Yudhi said whoever was chosen to become the new finance minister should have good macroeconomic and fiscal knowledge.
JP Morgan analyst Sin Beng Ong said the market would be taking a “wait-and-see approach” to see Mulyani’s replacement before making any new investments.
“I’d say Sri Mulyani is seen by markets all over the world as someone who is very capable and successful. Despite her departure, there is someone who is very capable and has the potential to step up. All of [the potential candidates] are basically very well regarded and respected,” Sin said.
“ Indonesia is still in very good hands.”
