Indonesia Bonds, Stocks Pare Gains After Growth Trails Estimates

Indonesian stocks and sovereign bonds pared gains after a report showed the country’s first-quarter economic growth trailed estimates.

Gross domestic product increased 5.21 percent from a year earlier as mining expansion slowed, official data showed today. That was the least since the third quarter of 2009 and short of the 5.59 percent median forecast in a Bloomberg survey. DBS Group Holdings Ltd. is considering revising its 2014 expansion projection to about 5.5 percent to 5.9 percent, from 6 percent.

“There’s the sense that the economy is underperforming its potential,” said Gundy Cahyadi, an economist at DBS in Singapore. “This slowdown should be temporary” as the mining figures are volatile, he said.

The Jakarta Composite index of shares closed 0.1 percent higher at 4,842.503, after gaining as much as 0.4 percent earlier. The yield on the government’s 8.375 percent bonds due March 2024 dropped two basis points to 7.96 percent, after falling as much as four basis points, according to the Inter Dealer Market Association.

PT Unilever Indonesia rose 1.8 percent, lending the biggest boost to the benchmark stocks gauge, while PT Bank Negara Indonesia slid 1 percent and PT Perusahaan Gas Negara dropped 0.5 percent

The rupiah was little changed at 11,518 per dollar, prices from local banks show. In the offshore market, one-month non-deliverable forwards were steady at 11,560, trading 0.4 percent weaker than the onshore rate, according to data compiled by Bloomberg.

Bank Indonesia set a fixing used to settle the forwards at 11,511 per dollar today, from 11,537 on May 2. One-month implied volatility, a measure of expected swings in the exchange rate used to price options, slid 56 basis points, or 0.56 percentage point, to 10.56 percent.

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