The Jakarta Composite Index posted its biggest one-day increase in 18 months on Wednesday as improving global sentiment, rising commodity prices and a dramatic rebound in PT Bumi Resources sent the index soaring to a 7.3 percent gain.
The JCI rose 182.66 points to close at 2,696.78. It was the world’s second-best performing market on the day among the 93 indexes tracked by Bloomberg. Volume was unusually heavy, with 11.2 billion shares worth Rp 6.8 trillion ($727.6 million) changing hands. Gainers outnumbered decliners at 203 to 27.
Edwin Sebayang, head of research at PT Bhakti Securities, said that improving global sentiment, which also saw a rebound in shares across Asia, and news regarding a tax case involving a Bumi Resources subsidiary, pushed the market higher. He said the recent sell-off, which saw the index fall 15 percent from its record peak on April 30, resulted in the market being oversold.
Bumi Resources jumped 20 percent after the Supreme Court ruled against a tax investigation into its subsidiary PT Kaltim Prima Coal.
However, falling risk appetite could continue to cut foreign inflows, so gains may be short-lived as investors reappraise euro sovereign risks as well as potential conflict between North and South Korea. A Jakarta-based equities dealer expected profit-taking on Thursday as the market was heading into a holiday on Friday.
“Today’s gains are partly a short-term technical rebound. With more bad news coming to equities markets, people will sell again, probably late in the afternoon tomorrow before the long holiday,” the dealer said.
Meanwhile, the rupiah rose the most in two weeks on speculation the central bank intervened to halt a slide in the currency that stemmed from Europe’s debt woes and tensions on the Korean peninsula.
The rupiah climbed 0.7 percent to 9,338 per dollar as of 4:22 p.m. in Jakarta. The currency dropped 1.3 percent on Tuesday, the most since November. Overseas investors cut their holdings of Indonesian shares by $346 million this month through Wednesday.
“The central bank is still in the market” to support the currency, said Juniman, an economist at PT Bank Internasional Indonesia. “If the central bank doesn’t intervene, the rupiah will reach 9,500.”
On the stock market, mining and agriculture shares led the way, rising 10.96 percent and 10.69 percent, respectively.
PT Energi Mega Persada surged by a record 52 percent on plans to acquire oil and gas blocks. Automotive distributor PT Astra International rose 10 percent after it forecast record 2010 car sales.
Source: Jakarta Globe, 26 May 2010