Stocks plunge to four-year low after terrorist attack<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The Jakarta Stock Exchange main index plunged on Monday to its
\nlowest level in four years as investors took fright at the
\ncountry's economic prospects following the massive bomb
\nexplosions over the weekend in Bali.<\/p>\n
On the currency market, possible Bank Indonesia intervention
\nhelped stemmed the rupiah's slide at 9,330 against the U.S.
\ndollar, though still much lower than 9,010 on Friday's closing.<\/p>\n
Analysts predicted further falls in both markets, as investors
\nexpected more details of the impact of the terrorist strike on
\nthe economy to emerge in the coming days.<\/p>\n
"It was panic selling," said stock market analyst Fajar
\nHidayat of PT Trimegah Securities. "Investors are concerned at
\nthe impact the terrorist strike will have on the economy."<\/p>\n
The Jakarta Stock Exchange (JSX) Composite Index dropped 38.99
\npoints to end at 337.47 in the weakest showing since April 1998.<\/p>\n
Worsening the fall, Fajar said, was a weak global market that
\nin last week's trading had dragged the JSX index down to 378,
\nfrom around 400.<\/p>\n
But investor worries have now shifted to the local economy
\nbecause of the terrorist strike that killed at least 182 people,
\nmainly foreign tourists.<\/p>\n
The tourism sector is one of Indonesia's important economic
\ngrowth engines, with its ability to bring in foreign exchange
\nearnings, spur local tourism businesses and absorb employment.<\/p>\n
"Tourism accounts for some 4 percent of our gross domestic
\nproduct (GDP)," said Fajar, referring to the total value of
\nproducts and services a country produces within a year. "On
\naverage it contributes some US$ 4 billion in foreign exchange
\nrevenue per year."<\/p>\n
Stocks fell across the board, led by a 19 percent drop, to Rp
\n2,400, by market heavyweight PT Telekommunikasi Indonesia, he
\nsaid.<\/p>\n
According to him, at their current prices, many stocks such as
\nTelkom had become attractively cheap. Bargain hunting might set
\nin to stall a further slide in the index or even prompt a mild
\nrebound.<\/p>\n
Drawing from the experience when the market fell for three
\nstraight days after the bombing of the JSX building in 2000,
\nFajar predicted a further weakening.<\/p>\n
"But I doubt the index will break the 300 level," he said,
\nestimating that trading over the next few days would be within
\nthe range 328 to 343.<\/p>\n
The current level, 337, only comes close to those in April
\n1998 when the financial crisis was at full steam and the country
\nwas heading for a political showdown between then President
\nSoeharto and demonstrating students.<\/p>\n
Although the economy and political stability have improved
\nsince, neither is stable. Pressure is mounting from the prolonged
\nglobal economic downturn as it spells dry export markets and a
\nworsening of the five-year outflow of foreign capital.<\/p>\n
A treasurer at a foreign bank said the rupiah was helped by
\nBank Indonesia intervention, which he heard had amounted to $13
\nmillion to $15 million.<\/p>\n
Piles of foreign debt payments and other U.S. dollar payables
\nweighed heavy on the rupiah, he said. "People who before had been
\nwaiting to buy the dollar are now rushing into the market."<\/p>\n
He said the market was looking to the government to show
\nconcrete signs of its taking action against the terrorist threat.<\/p>\n
Halfhearted statements and actions, he said, would only
\nprolong market anxiety.<\/p>",
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