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Indonesia Stocks Advance Most in Two Months as Astra Rallies

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May 28 (Bloomberg) -- Indonesia’s stocks rose the most two months, led by auto-related companies including PT Astra International, on speculation the government will introduce measures to encourage purchases of alternative-energy vehicles.

The Jakarta Composite Index climbed 1.8 percent to 5,178.06 at 2 p.m., heading for the biggest gain since March 27. Astra, a Toyota Motor Corp. distributor in Indonesia and the biggest company in the Jakarta Composite, gained 6.4 percent, the most since September 2010. The stock provided the biggest boost to the benchmark measure. A sub-index of consumer goods stock which includes auto companies gained 2.3 percent, the most among 10 industry groups.

President Yudhoyono has signed regulations that would reduce the value-added tax on goods including low-cost “green” cars provided they are assembled in Indonesia and meet minimum local-content standards, Kompas reported on its website, citing Johnny Darmawan, president director of Toyota-Astra Motor. Calls to Darmawan’s mobile phone weren’t answered. He didn’t reply to a text message.

“This provides a positive catalyst for Astra shares,” Wilianto Ie, head of research at PT Nomura Indonesia, said by phone today. He has a buy recommendation for the Astra with a share-price estimate of 9,500 rupiah.

Other auto-related stocks also gained. Tire-maker PT Gajah Tunggal jumped 6.4 percent and PT Multistrada Arah Sarana rose 1.3 percent. Astra Otoparts Tbk PT, the parts-maker unit of Astra International, gained 4.9 percent.

To contact the reporter on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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