BANGKOK, July 23 — Indonesian stocks hit a new record today and outperformed the region for the week following the nomination of new central bank governor and low rate outlook amid economic optimism across Southeast Asia.
Indonesia’s Parliament approved the appointment of Darmin Nasution as central bank governor yesterday, as expected, a move seen as positive for the country’s reform drive and for bonds, stocks and the currency.
Nasution said there was no need to raise interest rates this year.
The Jakarta main share index finished up 1.07 per cent at 3,042.02, at one point hitting 3,051.37, topping the record of 3,019.01, set on the previous day. Its gain for the week rose to 1.66 per cent and the bourse was Southeast Asia’s best performer.
On technical charts, the outlook for the Jakarta stock index appeared to be brightening, according to John Teja, a director at Ciptadana Securities in Indonesian capital, who pegged the next index target at 3,200 for a short-term uptrend.
“Darmin approved as next BI governor will be a positive impact for the market. Darmin has maintained the key interest rate at record low of 6.5 per cent to aid credit growth and Indonesia’s credit growth is one of the most significant economic drivers,” he said.
Resource shares led gains in Jakarta, with International Nickel Indonesia surging 7.7 per cent and palm plantation firm Astra Agro Lestari rising 5.2 per cent.
The credit growth optimism also pushed up bank shares, with the third biggest lender, Bank Central Asia, rising 0.8 per cent and state lender Bank Mandiri up 1.7 per cent.
Most markets in the region ended around their day’s highs amid positive lead from US stocks, however, a Spanish newspaper reported some of the country’s 18 savings banks had failed stress tests, highlighting some nervousness ahead of the release of Europe-wide test results later in the day.
US stock index futures were up 0.52 per cent at 0911 GMT.
Singapore rose 0.6 per cent to its highest in almost three months, Malaysia gained 0.7 per cent, hovering around 10-week highs and Thailand closed up 0.87 per cent at 26-month highs.
The Philippines and Vietnam each finished the session nearly flat and posted losses for the week, bucking the trend of the major markets.
In Bangkok, the Bank of Thailand’s upward revision to 2010 GDP added to the broader optimism surrounding the economy. The Thai index gained 1.53 per cent for the week, the second best after Indonesia.
Chief executive Montree Sornpaisarn at top broker Kim Eng Securities said the SET index may rally to 900, with improving earnings outlook and easing political unrest would influence buying from foreign investors.
Daily market volume in Bangkok remained healthy of 38.8 billion baht after it rose to a 9-month high of 42.8 billion baht yesterday. Foreign investors bought a net 2.83 billion baht of Thai shares today after a net selling a day earlier.
Thailand’s bank subindex rose 1.4 per cent amid expectations the sector would benefit from the economic recovery and interest rate rises.
Third-ranked Kasikornbank rose 2.6 per cent, the biggest Bangkok Bank climbed 0.7 per cent and number four Siam Commercial Bank was up 2.4 per cent.
In Singapore, property stocks gained after final private home prices data from Singapore’s Urban Redevelopment Authority (URA) released today for the second quarter revised up to 5.3 per cent from 5.2 per cent earlier.
CapitaLand, Southeast Asia’s largest developer, was up 1.04 per cent and property developer City Development climbed 1.9 per cent. — Reuters
