Analysts say stocks, rupiah to plummet after Bali terror

Analysts say stocks, rupiah to plummet after Bali terror

A'an Suryana, The Jakarta Post, Jakarta

The Jakarta stock market and the rupiah were expected to fall
steeply this week, following devastating bomb blasts on the
tourist island of Bali over the weekend, which killed nearly 200
people, mostly Australian tourists, stock and currency analysts
said on Sunday.

"The news is a terrible shock. It was the world's second
largest terrorist (bomb) attack on civilians after the Sept. 11
attacks," Jasso Winarto, stock analyst with Sigma Research
Institute, told The Jakarta Post.

Panic selling could well hit Jakarta's stock exchange, which
would further drag it down after a bearish trend which began in
September and continued until the close on Friday.

"Psychologically, the investors will consider Indonesia unsafe
for investment and they will pull their money out of the
country," Jasso explained, adding that the investors will take
their money to safer countries.

Foreign tourists will also leave now or cancel future trips
here, which could devastate the tourist industry, he said.

It could take as much as one or two years before the
international community will again view Indonesia as safe for
tourists, Jasso said.

The tourism industry contributed foreign exchange earnings
last year amounting to some US$5.4 billion, the third largest
foreign exchange earner here after the textile and garment
industries.

The tourism industry, particularly in Bali, has proven to be
quite resilient despite the economic crisis and has become one of
the key drivers of economic growth during the difficult period.
It could remain in limbo for a long period as the consequence of
the Bali tragedy, said Jasso.

Another stock analyst, Zulfikar, concurred, saying that the
stock market would dive precipitously this week.

"The bomb blasts will aggravate an already bad situation. Even
without the bomb blasts, the stock market was expected to fall
further this week," said Zulfikar of Mandiri Sekuritas.

The Jakarta stock index declined everyday last week to close
at 376.46 on Friday. It closed at 408.43 the previous week.

The global stock markets, including Indonesia, have been in
limbo for many weeks amid fears over a possible U.S. attack on
Iraq.

Jasso predicted the Jakarta stock index would drop between
three to four percent, while Zulfikar expected a drop of between
10 and 20 points.

The currency market, which saw the rupiah stabilize at the Rp
9,000 to a dollar in recent months, will also feel the impact of
the Bali attacks.

Currency analyst Wiwan Wiradjaja said the rupiah would weaken,
as market players and tourists would rush to sell their rupiah
before leaving the country en masse.

"Speculators are also set to take advantage of the situation
and push down the rupiah," said Wiwan.