Indonesia's Stock Index Gains Most in Nine Years; Banks Advance

By Berni Moestafa

Nov. 3 (Bloomberg) -- Indonesia's stock index gained, set for its biggest increase in more than nine years, on speculation inflation slowed in October and that the central bank will follow the global trend toward lower interest rates.

PT Bank Rakyat Indonesia jumped 20 percent, leading gains among financial companies. PT Tambang Batubara Bukit Asam surged 20 percent after saying it will join an affiliate of U.S. buyout company TPG to acquire a stake in PT Bumi Resources, Asia's largest thermal-coal exporter.

The Jakarta Composite index rose 108.78, or 8.7 percent, to 1,365.48 as of the noon local-time break, on course for its biggest gain since June 8, 1999. All of the benchmark's nine industry groups advanced.

``A drop in the key interest rate would be a boon to our economy,'' said Norico Gaman, head of research at PT BNI Securities, which manages about $155 million in assets. ``It will boost people's purchasing power, which will benefit banks, automotive, infrastructure and property companies.''

Bank Rakyat, Indonesia's third-biggest by assets, added 20 percent to 4,125 rupiah, contributing the most to the stock index's advance. PT Bank Mandiri, the largest, rose 20 percent to 1,870 and PT Bank Central Asia, the biggest by value, climbed 7.4 percent to 2,900.

Indonesia's consumer prices rose 11.9 percent from a year earlier, after gaining 12.1 percent in September, according to the median forecast of 22 economists surveyed by Bloomberg News. Slower inflation widens the scope for the central bank to cut its benchmark interest rate following six increases this year. The government is set to announce inflation figures today.

India, U.S.

The Reserve Bank of India on Nov. 1 lowered its benchmark repurchase rate to 7.5 percent from 8 percent, joining the U.S. Federal Reserve, Japan and other central banks in cutting borrowing costs last week to bolster the global economy.

Bukit Asam, which holds a quarter of Indonesia's coal reserves, added 20 percent to 6,550 rupiah. The company and Northstar Equity Partners plan to buy a $1.3 billion stake in Bumi, Bukit Asam President Director Sukrisno said in an interview yesterday.

PT Adaro Energy, Indonesia's second-largest coal miner, added 19 percent to 810 rupiah and PT Indo Tambangraya Megah, the unit of Thailand's largest coal miner, Banpu Pcl, rose 20 percent to 9,200 rupiah. Thermal-coal prices at Australia's Newcastle port, a benchmark for Asia, rose for the first time in nine weeks, gaining 5 percent to $100.83 a metric ton in the week ended Oct. 31, according to the globalCOAL NEWC Index.

PT Astra Agro Lestari, the nation's biggest publicly listed plantation company, climbed 20 percent to 7,250 rupiah and PT Bakrie Sumatera, the third largest, rose 19 percent to 320 rupiah after the price of palm oil gained. Palm oil futures rose as much as 7.9 percent to 1,634 ringgit ($464) a metric ton in Kuala Lumpur, improving oil-palm growers' earning prospects.

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net