Further unrest disrupts local financial market

Further unrest disrupts local financial market

JAKARTA (JP): Continuing unrest in the country sent the local
financial market into a tailspin on Monday, with the rupiah
hitting 11,950 against the U.S. dollar and the stock market
falling to another five-year low.

Currency dealers and stockbrokers said the news reports of
looting and riots in Medan, North Sumatra, dragged down market
sentiment on the rupiah and local stocks.

Dealers said the rupiah opened at 11,750, lower than Friday's
close of 11,650.

However, dollar sales by state banks saved the currency from
falling further and even boosted it to 11,550 by the close of
trading.

"Without such intervention, the rupiah for sure would have
tottered because of all of the unrest," a chief dealer with a
local private bank said.

It was reported that shops were looted and buildings damaged
when thousands of public transport workers rallied in Medan on
Monday in the latest protest against escalating prices.

The workers gathered at the provincial governor's office
shouting slogans and demanding the government lower prices of
spare parts and basic commodities.

Dealers said that Indonesia's ravaged financial market had not
recovered yet as the government had not fully introduced clear-
cut measures to pull the country out of its dire economic crisis.

"The rupiah might sink to between 12,000 and 12,500 in the
days ahead," a dealer with another local private bank said,
pointing out that unresolved political and social uncertainties
at home would pose a major problem for the shattered rupiah.

The Jakarta Stock Exchange (JSX) index also fell, with the JSX
Composite Price Index closing 3.44 points lower to 320.59.

Trading turnover totaled 182.78 million shares valued at Rp
229.96 billion.

Stock brokers said the absence of fresh leads in the local
market combined with news reports of fresh riots and looting in
Medan was responsible for market staying in the doldrums.

"Though other regional markets rose, our market was down.
Market fears that riots in Medan could sear tensions in other
cities have scared investors away," the head of research of BNI
Securities, Adrian Lesmana, said.

Stock prices increased slightly in the morning on renewed
buying orders by short-term investors.

But after the riots broke out in Medan, selling ruled the
market in the afternoon, sending the price index down.

In time of uncertainty and high interest rates, no long-term
investors would enter the market and only short-term investors
were prepared to trade in local stocks.

"There are no long-term investors now. Most existing investors
just buy stocks in the morning and take profits in the
afternoon," Adrian said.

Stock analysts said the local market would continue to be
depressed until the government introduced much-needed efforts to
improve the country's wrecked economy and lower interest rates.

Most blue chips stocks fell Monday, with state-owned
telecommunication firm PT Telkom falling Rp 25 to Rp 2,000 on
2.84 million shares.

State-owned tin miner PT Tambang Timah slid Rp 475 to Rp 4,100
on 127,500 shares changing hands, state cement maker PT Semen
Gresik was down Rp 150 to Rp 8,250 on 3,44 million shares, and
state general mining firm PT Aneka Tambang fell Rp 25 to Rp 1,375
on 3,04 million shares. (aly)