Southeast Asia stocks: Indonesia at record high after rate cut; most others up ahead of holidays

[BANGKOK] The Indonesian key stock index rallied to a record high on Wednesday amid optimism about the domestic economy after an unexpected rate cut by the central bank, while Malaysian shares snapped three days of gains in a shortened trading session.

The Jakarta composite index was up about one per cent at 5,393.27, after climbing to an all-time high of 5,415.38.

Interest rate sensitive stocks led the gains, boosted by foreign-led buying, Thomson Reuters data showed. Bank Rakyat Indonesia jumped 3.3 per cent and Bank Mandiri advanced 2.6 per cent, both hitting record highs.

Indonesia's central bank unexpectedly cut its benchmark interest rate by 25 basis points to 7.5 per cent after market close on Tuesday.

The move officially ended Bank Indonesia's tight-bias cycle which started in May 2013, while lower interest rates boded well for domestic demand, broker Bahana Securities wrote in a report. It upgraded its estimate for 2015 GDP growth to 5.45 per cent from 5.30 per cent.

"While surprising, we applaud BI's looser monetary policy, which we think indicates its efforts to support President Jokowi's expansive fiscal policy this year, particularly given expectations of subdued inflation on lower global oil prices," Mr Bahana said.

Kuala Lumpur composite index ended the day down 0.1 per cent amid weaknesses in financial shares. RHB Capital dropped 2.8 per cent, the worst performer on the index, and Public Bank fell 1.3 per cent, the third worst.

Data showed annual inflation in Malaysia fell to a more than five-year low of 1.0 per cent in January as oil prices skidded, but economists do not expect the central bank to follow others and respond by cutting interest rates.

Other Southeast Asian stock markets traded in positive territory while Asian shares rose amid signs Greek banks will continue to receive emergency funding despite a breakdown in debt talks between Athens and eurozone finance ministers.

The Thai SET index was up 0.7 per cent, bouncing off Tuesday's more than two-week closing-low.

Shares of retailer CP All rose 0.6 per cent, their first gain in four days, after the company reported a 23 per cent rise in quarterly earnings and said it planned to open new stores in 2015.

Singapore shares finished the day 0.6 per cent higher, rebounding from a fall on Tuesday. Both Singapore and Malaysia traded for half a day and will remain closed through Friday for the Lunar New Year holidays.

Indonesia and the Philippines will be shut on Thursday, while Vietnam will remain closed through Feb 23.

REUTERS