Asian markets can expect respite from volatility<\/p>\n
SINGAPORE (AFP): Asian financial markets can expect a respite
\nfrom volatility with the Lunar New Year and Moslem holidays
\nahead, but unrest in Indonesia looms as a threat to stability.<\/p>\n
With major Asian markets such as Hong Kong and Singapore
\nclosed for three days from Wednesday, analysts expect thin
\ntrading as investors keep a wary eye on political developments
\nand potential social unrest in Indonesia.<\/p>\n
\"We could see quiet trade, with people squaring positions. No
\none would want to hold long positions with all the uncertainty,\"
\nsaid Eddie Lee, regional economist with Vickers Ballas Investment
\nResearch.<\/p>\n
Asian markets open over the long holiday would take cues from
\nIndonesia, as well as the performance of Wall Street as it reacts
\nto U.S. corporate earnings' results, he added.<\/p>\n
The Dow Jones has also been hit by negative sentiment towards
\nU.S. exposure to Asia.<\/p>\n
Any positive pump-priming in Japan to restart is stagnant
\neconomy, and a decisive plan to restructure South Korea's
\nmarkets, could also boost the market, Lee added.<\/p>\n
The downturn in most Asian stock markets and the continued
\nweakening of Southeast Asian currencies against the dollar last
\nweek were largely blamed on pessimism over Indonesia's political
\nsuccession issue and growing economic woes led by worries about
\nthe fate of 65 billion-dollar worth of debt held by Indonesian
\ncorporates to private banks.<\/p>\n
However, ANZ Investment Bank felt that possible default in
\ndebt payments would \"no longer\" be an issue driving Asian markets
\nthis week.<\/p>\n
\"This is so because we believe that there are increasing
\ncorporations who are in talks with their respective creditors in
\ntrying to rollover their loans,\" it said in a weekend report.<\/p>\n
As confidence in Indonesia deteriorated, it was being deprived
\nof U.S. dollars and onshore Indonesian banks rushed to supply
\nrupiah to their creditors, who then used the embattled currency
\nto buy what U.S. dollars they could to settle debts.<\/p>\n
This was one of the factors that drove the rupiah to a record
\nlow of 16,500 against the greenback last week, as the central
\nBank Indonesia (BI) intervened both onshore and offshore to
\nsupport the rupiah.<\/p>\n
The government has made efforts to provide basic goods at
\naffordable prices in Indonesia as the Moslem-dominated population
\nreadies to celebrate the end of the holy month of fasting. But
\nthere are fears prices will skyrocket and mass layoffs will be
\nannounced after the holiday, triggering protests around
\nIndonesia.<\/p>\n
The Indonesian government has forecast an inflation rate of 20
\npercent for 1998, but many analysts estimate inflation at above
\n30 percent.<\/p>\n
\"A lot of people, when they return from holidays, might find
\nout they have no jobs and that could cause social unrest,\" said
\nNeil Saker, senior economist of SocGen-Crosby Securities in
\nSingapore.<\/p>\n
Jakarta has yet to demonstrate to investors a willingness to
\nbreak the strong links between politics and business, which have
\nbeen undermining reforms demanded by the International Monetary
\nFund.<\/p>\n
\"It would appear the obstacle is political. You can recommend
\nreforms but investors don't seem to trust the people in
\ngovernment,\" said a regional analyst with a foreign brokerage
\nfirm here.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asian-markets-can-expect-respite-from-volatility-1447893297",
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