Stock market depends on Iraq war: Analyst

A'an Suryana, The Jakarta Post, Jakarta

The stock market could go down or remain stable next week, depending on developments in a possible war with Iraq, an analyst said over the weekend.

Stock analyst Fajar Hidayat said investors would cautiously await UN weapon inspectors' report at the UN Headquarters in New York on Monday before taking any action.

Should the report indicate Iraq has weapons of mass destruction, as suspected by the U.S. and its allies, global stock markets will shudder at the prospect of U.S. attacks on Iraq.

"The Jakarta stock market is no exception. Investors will put themselves on the sidelines, waiting for the weapons inspectors' report and the U.S. response," Fajar said.

Should war be considered unavoidable, foreign investors would most certainly quit the market, leaving it in limbo, he said.

However, Fajar added, should the UN inspectors state that Iraq had no weapons of mass destruction, the market would remain normal, with the index staying between 395 and 425.

Last week, stock trading ended at 405.34, with a total trading volume of 286.76 million shares, valued at Rp 229.7 billion.

A currency analyst said war in Iraq could also have an impact on the rupiah.

Should war break out, currency traders would be moved to speculate on the rupiah, Ferial Anwar said.

The rupiah ended last week at 8,893 per U.S. dollar, slightly lower than its 8,875 close the week before.

According to Farial, on the domestic front, street rallies would not pose any threat to the rupiah.

Farial was referring to street rallies against the recent increase in fuel prices and electricity and telephone charges. However, after the government announced reductions in some components of the prices and charges, the protests eased.

"The rupiah might remain steady at 8,850 to 8,900 in the near future," he added.