Indonesia's key index hit a near four-week closing high on Tuesday as rate-sensitive stocks advanced before Bank Indonesia announced its interest rate decision, a day after the president raised subsidised fuel prices to help fund his reform agenda.
The market awaited the central bank announcement due later in the day, while Finance Minister Bambang Brodjonegoro said the government is expected to save up to 140 trillion rupiah ($11.54 billion) next year from a cut in fuel subsidy. The benchmark Jakarta's composite index rose 0.96 percent to 5,102.47, its day high and the highest close since October 23. Shares of Bank Rakyat Indonesia and Bank Mandiri were top actively-traded stocks by turnover.
The current policy interest rate level is supportive to rising inflationary pressure, broker Bahana Securities said. "There is no need for BI to raise interest rate for now on sufficient cushion of spread between its policy rate of 7.5 percent and core inflation which is running at 4 percent," said Harry Su, head of research of Bahana Securities in Jakarta.
Thai shares closed up 0.8 percent at a two-week high. The cabinet approved, as expected, a project to build dual-track railways, lifting the outlook of construction industry. Shares of Italian Thai Development outperformed, up 7 percent. Among regional gainers, Philippine index rose for a third day to a more than two-week closing high, with inflows lifting shares of BDO Unibank and property firm Megaworld Corp, stock exchange data showed.
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