Is Singapore immune to RI contagion?<\/p>\n
By Mantik Kusjanto<\/p>\n
SINGAPORE (Reuters): What a difference a year and a half
\nmakes.<\/p>\n
In May and June of 1998, when Indonesia sneezed, Singapore's
\nmarkets caught a cold.<\/p>\n
But a recent spate of violence in the city state's next-door
\nneighbor has been at most a minor factor for the Singapore dollar
\nand share market, and fund managers, currency traders and
\nstrategists say there is little risk to investors that will
\nchange anytime soon.<\/p>\n
\"It hasn't been so serious (as) to cause any major contagion.
\nInvestors seem to be more nervous about Indonesia per se than the
\nregion or Singapore as a whole,\" Merrill Lynch's fixed-income
\nstrategist Vincent Low told Reuters.<\/p>\n
In recent weeks more than a thousand have died in clashes
\nbetween Muslims and Christians in Indonesia's eastern spice
\nislands, or Maluku, while closer to Singapore's shores, the
\nIndonesian resort island of Bintan experienced a series of
\nsometimes violent protests over land rights.<\/p>\n
But the violence has been a minor factor at most in Singapore,
\nwhere currencies have looked more at technical charts and
\ncommercial flows, and shares at U.S. market trends and a news of
\nmuch earlier than expected domestic telecommunications sector
\nliberalization.<\/p>\n
Singapore companies, which had suffered in the past when
\nIndonesia's fortunes and people were battered, would not be too
\nbadly affected by fresh troubles as most had substantially
\nwritten off their investments in 1997 and 1998, fund managers
\nsaid.<\/p>\n
When the Bintan protests broke out, Singapore conglomerate
\nSembCorp Industries Ltd, which runs the Bintan Industrial Estate,
\nsaid its total investment of S$111.6 million at the estate had
\nalready been written down to S$33.2 million, only about 0.5
\npercent of the group's gross assets.<\/p>\n
Currency traders and stock brokers said the riots in the
\ntourist island of Lombok did rattle the rupiah and the Jakarta
\nstock market last week on fears the unrest would spread to the
\nIndonesian capital of Jakarta, but even then the impact on the
\nrest of the region was minimal.<\/p>\n
The mood contrasts strongly with the prevalent atmosphere in
\nMay 1998 when long-time Indonesian President Soeharto stepped
\ndown and the country saw widespread protests and race riots,
\nleading to a large exodus of people, mostly Chinese Indonesians,
\nto Singapore, and causing its financial markets to drop.<\/p>\n
Much of that unrest was in or near Indonesia's economic and
\npolitical center.<\/p>\n
Thus far the latest unrest has remained mainly in Indonesia's
\noutlying areas, and has not seen a similar exodus to Singapore,
\nfavored by ethnic Chinese partly because that group predominates
\nin the city state.<\/p>\n
Another difference lies in Asia's and Singapore's recoveries,
\nfinance sector analysts said. The internal dynamics of
\nstrengthening Asian economies in general and Singapore in
\nparticular had made them better able to withstand possible
\nspillover from the still troubled Indonesia.<\/p>\n
In 1998 several Asian countries had been badly hit by the
\neconomic crisis that began in 1997 and Singapore was starting to
\nfeel the pinch.<\/p>\n
But now economists see it growing at or beyond the high end of
\nthe official forecast of 4.5 to 6.5 percent in 2000, after
\nhealthy gains in 1999.<\/p>\n
Analysts said the contagion effect would be less pronounced
\nnow as Asian markets continued to decouple from one another.<\/p>\n
\"Within the region, we can see some decoupling ... to some
\nextent it's being accelerated,\" said Eddie Lee, economist of
\nVickers Ballas, adding that countries which could not put their
\nact together would continue to lose out to others in the region.<\/p>\n
Jason See, vice president at OUB Asset Management, said
\nIndonesia would only be a major factor in his investment
\ndecisions for the region if the now scattered trouble became more
\nwidespread.<\/p>\n
\"At this moment ... we are not so concerned because it's a
\nnatural process of democracy,\" See said.<\/p>\n
\"As long as it's not spreading across the country, we are
\ncomfortable. We are not considering it as a major factor for our
\ninvestment decisions,\" he added.<\/p>\n
But when it came to putting money into Indonesia itself,
\ninvestors remained wary.<\/p>\n
\"There are risks in Indonesia and you can't ignore it. We
\nstill advise clients to underweight Indonesian bonds and avoid
\nexposures to the rupiah for the time being,\" Low of Merrill said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/is-singapore-immune-to-ri-contagion-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}