Deadly riots cast shadow over financial markets
JAKARTA (JP): Deadly clashes between students and security forces will cast a shadow over Indonesia's financial markets this week as anti-government demonstrations may get worse, analysts said.
The analysts said that the rupiah and share prices, which were relatively stable last week, might lose footing due to the uncertainty.
"Market sentiment will be very bad this week as there will be worries that the violence might continue," Adrian Rusmana, head of research at BNI Securities, told The Jakarta Post on Saturday.
Foreign fund managers were concerned by the increased social and political instability in Indonesia after bloody confrontations between security officers and student protesters killed 12 people and wounded dozens more.
Bloody clashes broke out in several parts of Jakarta on Friday of last week, as student led anti-government protests intensified in their efforts to enter the complex of the People's Consultative Assembly (MPR), which was holding its Special Session.
The students' attempts to enter the MPR building continued on Saturday, even though the session ended on Friday night.
Students and opposition leaders said that the outcome of the session favored the ruling Golkar party, and would allow it to remain in power. Also, it did not accommodate the peoples' demands to end the Armed Forces (ABRI) dual function and to prosecute former president Soeharto for his alleged abuse of power during his 32 years of rule.
Stock analysts and brokers said that the students' dissatisfaction would prompt more confrontations this week.
Analysts said that since there was no signs of social and political stability, most investors would likely move to the sidelines, resulting in a decline in trading activities.
"What's more is that there is a holiday on Tuesday," BNI's Adrian said.
The country's financial markets will be closed on Tuesday in observation of the Ascension of the Prophet Muhammad.
Other stock analysts said that most dealers might prefer to stay home on Monday, even though the stock market in the JSX building would remain open, as they feared unrest similar to the May riots which toppled former president Soeharto.
"I wonder if traders and brokers will go to the trading floor on Monday," said one analyst.
Like the stock market, the beleaguered rupiah would face similar questions.
Stable
The analysts said that the rupiah, which remained stable to close at 7,850 against the U.S. dollar on Friday despite the clashes between students and security officers, was expected to be traded in thin volumes this week.
"The fate of the rupiah will depend largely on the developments in the country's political condition," a chief dealer with a joint venture bank said on Saturday.
The dealer said that if business and social activities returned to normal, the rupiah might surge to around the 7,500 level this week.
"But if the political and social situation continues to deteriorate, the rupiah might sink to the 9,000 or 10,000 level," the dealer said.
The Jakarta Stock Exchange (JSX) rose 1.57 points to 355.54 last week, compared to its 353.97 level the previous week.
The daily average turnover rose to 469.05 million shares, compared to 318.30 million shares the previous week.
The daily average transaction value, however, declined to Rp 438.79 billion last week as compared to Rp 449.71 billion the previous week. (aly)