Fri, 15 Sep 2000

JSX blast shatters investor confidence

JAKARTA (JP): The blast at the Jakarta Stock Exchange (JSX) building on Wednesday has further rattled investor confidence in the country and may slowdown the economic recovery process, analysts and government officials say.

Stock analyst Dandossi Matram said on Thursday that the bombing further increased the risk associated with Indonesia.

"When someone bombs a stock exchange building, it's bound to attract international attention," he said. He, however, expected no panic selling when stock trading on the JSX resumes on Monday as market players would have already "cooled down" by then.

"The trade suspension would allow the market to cool down and reduce the possibility of panic selling once trading reopens on Monday," he said.

Trading on the JSX was suspended Wednesday afternoon after a car bomb exploded in the car-park basement of the building killing 10 people. The JSX composite index was at 442.091 points, the lowest so far this year.

The bombing occurred a day before the resumption of the corruption trial of former authoritarian president Soeharto. An explosion also occurred on the day before the first trial session of Soeharto opened about two weeks ago.

The JSX management held a successful trading simulation late on Thursday with trading systems and equipment working normally. The building management insisted that trading should remain suspended due to "minor" technical problems, including a non- functioning water pipeline system.

But Coordinating Minister for Economy Rizal Ramli called on the exchange's management to resume trading as soon as possible to help revive market confidence.

Chief commissioner of PT Bursa Efek Jakarta Erry Riyana Hardjapamekas said that the exchange needed to remain closed until Monday for security reasons.

"There will be a construction audit to check whether the building has any cracks that might pose a danger," he said.


Meanwhile, after falling to Rp 8,775 per U.S. dollar late on Wednesday, the rupiah gained ground and managed to strengthen to around Rp 8,550 late on Thursday.

Traders said the rupiah inched up after Bank Indonesia intervened in the currency market in the afternoon to protect the Indonesian unit.

But Bank Indonesia deputy governor Miranda Goeltom said on Thursday that the central bank had not taken any special measures to safeguard the currency.

Speaking on the sidelines of a seminar, Miranda said that any market intervention measures must be based on serious calculation.

"So in the short term, there will be no special action. We still have to study the situation first," she said.

She said that the central bank would continue to follow a consistent monetary policy to help maintain investor confidence in the country.

The JSX bombing created jitters in the currency market, thereby increasing the pressure on the rupiah, she said, adding that the weakening of the rupiah had also been in line with the fall of other currencies in the region.

Separately, International Monetary Fund chief representative in Jakarta John Dodsworth expected the weakening in the rupiah would only be temporary.

"The rupiah is slightly better today," he said following a meeting with senior economic ministers.

But Cabinet Secretary Marsilam Simanjuntak said that the JSX bombing and the Attambua killing could sabotage efforts to accelerate the country's economic recovery process.

"The positive development in the economic front will be badly affected by the Attambua incident and the JSX bombing," he told reporters following a Cabinet meeting on Thursday.

The meeting was chaired by Vice President Megawati Sukarnoputri and was also attended by President Abdurrahman Wahid. (rei/bkm/byg)