JSX composite index hits four-year low

JSX composite index hits four-year low

JAKARTA (JP): The Jakarta Stock Exchange (JSX) composite
index, the main gauge for local share prices, nose-dived
yesterday through the psychological 400-point barrier hitting a
four-year low, stockbrokers said.

The Indonesian rupiah trailed the fall in the stock market and
continued to drop yesterday despite market intervention by Bank
Indonesia, the central bank, said currency dealers.

After falling 4.27 percent Wednesday, the JSX main composite
index fell 4.7 percent yesterday, or 19.52 points, down to 396.13
points.

"It's a crash," Paribas Asia Equity head of sales Robert
Allison said.

Harita Securities president Christina Lim said the market
responded negatively to the announcement of Indonesia's total
foreign debt of US$117 billion and of the government's commitment
not to bailout, directly or indirectly, private offshore debt.

Allison, Lim and other stock analysts attributed yesterday's
fall to regional sentiment, investors' lack of confidence and the
downward trend of corporate earnings in the third quarter.

"Corporate earnings in the third quarter have been much poorer
than people expected," Allison said.

He said downward pressure on the JSX would continue until the
first quarter of next year as most people were afraid to hold
onto stocks prior to the convening of the People's Consultative
Assembly in March to elect a new president and vice president.

The last time the JSX main price index was that low was on
August 31, 1993, when it fell to 407.30.

"Most people are apprehensive and anticipate that worse times
are ahead," a stock analyst said.

In the currency market, the spot rupiah slid again yesterday
to close at 3,570 against the U.S. dollar, from an opening of
3,520, despite market intervention by the central bank, dealers
said.

A local bank chief dealer said the central bank intervened in
the spot and swap markets several times, but failed to defend the
rupiah as the demand for dollars remained high the entire day.

He estimated that the central bank had spent more than $1
billion to defend the rupiah this week.

"Rather than wasting dollars through intervention, Bank
Indonesia should lend the dollars to corporations which need them
to repay their foreign debts. This way, demand for dollars would
weaken," he said.

Minister of Finance Mar'ie Muhammad said yesterday after
attending a working session with the House of Representatives
Commission VIII for state budget and finance that the drastic
fall of the South Korean won was responsible for the weakening of
the rupiah in the last few days.

"The Korean won is at its weakest, and this has triggered the
fall of all Southeast Asian currencies. We can see that the Thai
baht, which recently strengthened, is now weakening again. These
factors, of course, influence the rate of the rupiah," Mar'ie
said. (aly/rid)

Currency -- Page 11