Indonesia keeps stock market shut after global drop Source: 11-OCT-2008 Intellasia | Reuters
Oct 11, 2008 - 7:13:00 AM
Indonesia dropped plans to reopen its stock market on Friday morning after a two-day suspension and despite policy makers unveiling new measures aimed at calming fears that Southeast Asia's largest economy faces a new crisis.
The closed Indonesia Stock Exchange is seen in Jakarta October 10, 2008. Indonesia dropped plans to reopen its stock market on Friday morning after a two-day suspension and despite policy makers unveiling new measures aimed at calming fears that Southeast Asia's largest economy faces a new crisis.
REUTERS/Supri (INDONESIA)
The move to delay the scheduled reopening came after steep losses on Wall Street on Thursday and another free-fall on Asian markets on Friday.
Erry Firmansyah, president director of the exchange, said the decision was made "to protect investors and prevent further sharp falls" in the market.
The official said the exchange had consulted the government and would monitor the markets before deciding when to reopen.
"We are here to protect our financial markets entirely, not just the stock market. We also do not want the rupiah to collapse," Firmansyah said on Metro TV.
Brokers had earlier said that the stock market looked set to fall sharply on Friday morning.
John Teja, head of equities sales at Ciptadana Securities, said the market could have dropped around 10% on the opening.
Along with a plunge in the stock market, which has fallen 47% this year, the rupiah currency is also trading near its lowest in about three-years, although so far has held up much better than other regional currencies such as the South Korean won.
Indonesia's central bank was selling dollars early on Friday trying to defend the 9,700-per-dollar level, traders said.
In line with some other countries, Indonesia eased on Thursday accounting rules on the fair value of assets, or mark-to-market. It has also eased reserve requirements for commercial banks as well as made it easier for listed firms to conduct share buybacks.
Finance minister Sri Mulyani Indrawati said after announcing the new measures on Thursday she expected them to "lead to a more conducive and calm situation not only in the stock exchange but also in our banking sector and the money market."
The central bank, Bank Indonesia, has also said it now saw more room to cut interest rates. This followed it stating that inflation was its main concern, having on Tuesday raised its overnight policy rate by 25 basis points to 9.50%.
Indonesia's benchmark composite index lost more than a fifth this week. The stock exchange suspended trading on Wednesday and Thursday, the first time the exchange has voluntarily halted trade.
Indonesia was the country hardest hit by the Asian financial crisis a decade ago, due in part to large corporate foreign debt and a weak banking system. Political upheaval also meant it took longer for the country to recover.
