Bloomberg Indonesia Stocks Fall to Four-Month Low on China, Inflation

Indonesia’s stocks fell, driving the benchmark stock index to a four-month low, after Chinese economic reports fanned concern the world’s biggest energy user will tighten monetary policy and slow commodities demand.

PT Adaro Energy, Indonesia’s second-largest coal producer, fell the most in a month as UBS AG lowered the stock to “neutral” from “buy.” PT Aneka Tambang, Indonesia’s second- biggest nickel producer, dropped 3.2 percent as the price of the metal slumped. PT Astra International, the nation’s largest auto retailer, dropped 2.5 percent amid speculation the Indonesian central bank will follow China in increasing interest rates to combat rising consumer prices.

The Jakarta Composite index fell 2.3 percent to 3,454.12 as of the 4 p.m. local-time close. The measure has lost 8.8 percent since closing at a record-high on Dec. 9 as faster inflation raised concern the central bank has fallen behind regional neighbors in lifting borrowing costs.

“China’s economy has a significant impact on commodity exporting nations such as Indonesia,” said Finny Fauzana, who helps manage about $58 million in assets at PT PNM Investment Management in Jakarta. “Interest-rate sensitive stocks in the property, consumer and banking sectors remain under pressure because of inflation.”

China today reported economic growth of 9.8 percent in the fourth quarter, exceeding the 9.4 percent median estimate in a Bloomberg News survey.

Ratings Lowered
Mining companies were the biggest drag on the Jakarta Composite, with the mining gauge tumbling percent. Adaro dropped 7.6 percent to 2,450 rupiah, the most since Dec. 17. PT Bumi Resources, Asia’s biggest exporter of power-station coal, lost 3.2 percent to 3,050 rupiah.
 UBS cut Adaro to “neutral” from “buy” and Bumi to “sell” from “buy,” citing “near-term seasonal weakness and a ‘‘correction’’ in coal prices.

Aneka Tambang, a gold and nickel producer, fell 3.2 percent to 2,275 rupiah. Nickel futures slipped 1.7 percent to $25,670 a metric ton in London yesterday, the steepest drop since Dec. 23.
A gauge tracking agricultural stocks retreated 3.2 percent. PT Astra Agro Lestari, Indonesia’s largest listed plantation stock, declined 4.3 percent to 23,450 rupiah and PT Bakrie Sumatera Plantations fell 2.7 percent to 365 rupiah.

Borrowing Costs
Bank Indonesia Governor Darmin Nasution said Jan. 14 the central bank may raise its benchmark interest rate from a record low of 6.5 percent as core inflation, which excludes food and energy prices, accelerates.

The country ordered banks to set aside more cash as reserves to reduce inflationary pressure in 2010, while refraining from joining Malaysia, Thailand and India in boosting borrowing costs.

Indonesia’s consumer prices rose 6.96 percent in December from a year earlier, exceeding the 6.71 percent median forecast in a Bloomberg News survey of 14 economists.

Astra International, which sells Toyota Motor Corp. cars, lost 2.5 percent to 47,800 rupiah and PT Lippo Karawaci, Indonesia’s biggest property developer, lost 5 percent to 570 rupiah.

To contact the reporter on this story: Berni Moestafa in Jakarta 

Last update: 5:21 AM ET, Jan 20