Indonesian shares outlook - Firmer as Dow's modest gains may spark rebound

Indonesian shares outlook - Firmer as Dow's modest gains may spark rebound

	Published : Fri, 14 Dec 2007 03:01 By : Agencies Print this Story

JAKARTA (Thomson Financial) - Indonesian shares are expected to open firmer Friday as the Dow's modest gains could prompt a rebound after the key index lost nearly 2 percent in the last two days.

Coal giant Bumi Resources may rise after the company told the stock exchange that it will propose an employee stock option scheme in January. If the plan goes through, Bumi will first buy back shares for the program.

'There is an opportunity for the market to rebound after the Dow rose. For one thing, we could expect some fresh inflow of funds' said Cece Ridwanulloh, fund manager at Ekokapital Sekuritas.

The widening gap between US interest rates and local rates, at 4.0 percent after the Fed's latest cut, is an incentive to attract foreign buying of rupiah assets, he said.

Investors may also focus on Bank Internasional Indonesia and Bank Danamon after Singapore government investment arm Temasek Holdings said it prefers to merge the banks, though it is also open to the option of selling its BII stake.

Temasek, through Fullerton Financial Holdings (FFH), is the majority shareholder of Sorak Consortium. Sorak owns 56.13 percent of BII shares. Temasek recently raised its stake in Sorak to 75 percent from 50 percent.

As of December 11, Bank Danamon is 68.05 percent owned by Asia Financial (Indonesia), also a subsidiary of FFH.

Overnight, the Dow rose 0.3 percent to 13,517.96.

Yesterday, the composite index dropped 40.11 points or 1.4 percent to 2,755.73 on volume of 3.90 billion shares valued at 5.11 trillion rupiah.

The Indonesian rupiah was trading at 9,325/9,330 to the dollar, down 0.2 percent from late Thursday.

(1 US dollar = 9,309 rupiah)

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