Stock, rupiah markets still gloomy over Iraq crisis

Stock, rupiah markets still gloomy over Iraq crisis

The Jakarta Post, Jakarta

With a war in Iraq being possibly only days away, the Jakarta
stock market this week is expected to remain depressed as jittery
investors stay away, a dealer said.

He said the gloomy tone would also be seen in global stock
markets as pro-war hardliners continued to campaign for an
immediate U.S.-led attack on Iraq.

"The hardliners, such as the U.S., Britain and Spain, look to
be rushing headlong for the war, prompting fears that they will
still go for it even without the support of the UN," a local
stockbroker with a European bank, who declined to be named, told
The Jakarta Post over the weekend.

On Sunday, the leaders of the three nations who are in favor
of military action against Iraq met on Portugal's Madeira island
as part of what analysts say is a last-ditch push towards
launching military action in Iraq.

"This sends signals that the pro-war countries will do
whatever it takes to justify their desire for a war, even though
we know that Iraq has been supportive in allowing its weapons
facilities to be inspected by the UN," he said.

This negative sentiment would continue to weaken the market
and the stock index as a result, he added.

Depressed by uncertainty over the Iraq crisis, the Jakarta
Composite Index has been on a declining trend over the past few
weeks.

Last week's trading saw the index drop to 387.880, down 1.913
points from the previous week with the daily volume averaging
311.36 million shares worth Rp 208.59 billion (US$23.4 million)
compared to 246.35 million shares worth Rp 178.18 billion the
week before.

The drop was the second consecutive weekly fall.

It is feared that a war will send world markets plumeting as
it could delay an expected rebound in the already fragile global
economy.

Worse still, a war could possibly send the world into another
global recession.

On the currency market, expected capital flows from continued
sales of state assets will limit the rupiah's bearish mood amid
gloomy global sentiment, a local trader said.

"While the overall mood is negative, flows of capital will
help to partly overcome fears of anti-U.S. protests should war
break out," she said.

Indonesia, the world's largest Muslim country, has been hit by
waves of anti-U.S. rallies over the past few years. In 2001
following the U.S.-led attack on Afghanistan, anti-U.S. rallies
were a regular occurrence here, hurting investor confidence and
the rupiah.

The national unit ended last week's trading at Rp 8,915 to the
U.S. dollar, lower than the 8,880 recorded at closing the week
before.