Indonesia Stock Index Tumbles 10 Percent
The Associated Press
JAKARTA, Indonesia: Trading was suspended indefinitely Wednesday on the Jakarta Stock Exchange after shares plunged more than 10 percent on fears about the global financial crisis.
The benchmark JSX index tumbled 168.1 points, or 10.4 percent to 1,451.67 points before the trading halt was ordered just before midday.
"We are not protecting the index, but the investors," bourse President Erry Firmansyah told reporters. "The suspension will take the whole day. We want investors to calm down before they make decisions."
Meetings were underway with financial institutions to determine when activity could be resumed, possibly Thursday morning, he said.
Firmansyah blamed the sell-off on turmoil in the U.S. financial market and said economic fundamentals remained strong in Indonesia.
The decline was driven by huge losses in commodities stocks. The index has fallen more than 20 percent in three days, and is off 47 percent since the start of the year.
Investors seemed to be dismissing comments by the central bank governor Tuesday that Indonesia will avoid the worst of the global credit crisis.
On Tuesday, Bank Indonesia raised interest rates a quarter percentage point, citing a two-year high in inflation — in contrast to Australia, where the central bank cut its rate by 1 percentage point.
Traders said the market had expected the rate increase and attributed the sharp fall to selling by major foreign investors.
"What is happening is panic selling to an extent that it is irrational," said Irvin Patmadiwiria, the head of investments at PT Lautan Dana Investment Management.
He said roughly 70 percent of stocks traded in Jakarta are owned by foreign investors, who are cashing out holdings to create liquidity.
Among the most active sellers were Merrill Lynch, United Overseas Bank, McGuire and JP Morgan, he said. They were dumping blue chip telecommunication, banking, and manufacturing shares.
www.iht.com/articles/ap/2008/10/08/business/AS-Indonesia-Markets.php