Indonesian share prices closed 0.8 percent higher on Monday after a volatile session amid rising hopes that Bank Indonesia will resume lowering the cost of borrowing later this year, dealers said. The rally was led by banks and gains in mining stocks as metal prices rose on the London Metal Exchange on Monday, they added.
The Jakarta Stock Exchange composite index closed up 18.14 points at 2,353.63, off an intra-day low of 2,325.33. Volume was 9.2 billion shares worth 4.85 trillion rupiah (530.92 million dollars). Gainers led losers 144 to 52, while 59 stocks were unchanged. The Indonesian rupiah was trading at 9,130/9,135 to the US dollar, up 0.4 percent from late Friday.
"Apart from rate cut hopes, people were buying banking stocks as they are perceived to be lagging behind other stocks in recent rallies," Valbury Asia Securities analyst Krishna Dwi Setiawan said. He believes the stock market still has further upside because it has lagged some other Asian bourses.
Among major stocks, Bank Rakyat Indonesia gained 250 rupiah to 6,800, Bank Mandiri rose 100 to 3,525, Bank Central Asia rose 100 to 6,400, Bank Danamon added 50 to 8,350 and Bank Internasional Indonesia (BII) surged 25 to 250.
The flurry of buying in BII was partly due to ongoing speculation that it will be merged with Bank Danamon. Both BII and Danamon are partly owned by Temasek Holdings, Singapore's state-linked investment firm.
Merging the two banks is an option for Temasek to comply with Bank Indonesia's ruling that no single entity will be allowed to control more than one bank by end-2010. Among other gainers, nickel miner Inco advanced 1,500 rupiah to 66,000 and Antam rose 75 rupiah to 2,825. Tin miner Timah gained 150 to 12,750 and coal miner Bukit Asam rose 200 to 6,600.
Nickel for three-month delivery was trading at 33,000 dollars per ton Monday against 32,300 dollars Friday, while tin was at 15,400 dollars per ton, up from 15,300 dollars.
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