Thursday, September 22, 2011

Jakarta plunges 8.9%, biggest fall since Oct 2008

SINGAPORE: Indonesia stocks plunged 8.9 percent on Thursday, Sept 22 their worst drop since the 2008 financial crisis, as concerns over the struggling rupiah currency and fears over the global economy battered a market that had been the region's best performer.

Jakarta's stock index shed 328.35 points to its lowest close since Jan. 24, its biggest single-day percentage loss since Oct. 8, 2008, at the height of the financial crisis.

The region's best performer last year, which attracted $1.6 billion of inflows to August on top of $2.4 billion in 2010, suffered outflows of $94.3 million on Thursday as worries over the weaker rupiah prompted panic selling.

"It's mainly because of internal currency issues with the rupiah seen weakening above 9,000," said Pardomuan Sihombing, head of research at Jakarta-based Recapital Securities.

"There is panic selling in stocks both from local and foreigners due to the weakening of rupiah and that will cause capital outflows. Firms with dollar exposure, especially importers including Indofood and Astra, will be affected," he said.

Indofood and Astra closed down 13 percent and 9.5 percent respectively.

Exchange authorities dismissed suggestions panic had taken hold.

"We're monitoring conditions. If there is one side that is panic selling, we will stop [trading]. But, for now, there's no panic selling," said Eddy Sugito, listing director at the Indonesia Stock Exchange.

"We will suspend trading if it falls 10 percent or more."



The dollar rose to a seven-month high against major currencies as a broad sense of aversion to risk swept through financial markets. The U.S. Federal Reserve set the ball rolling on Wednesday when it launched "Operation Twist", a plan to lower borrowing costs by selling or not renewing short-term debt in

favour of longer bonds.

Emerging Asian currencies are expected to weaken further after the Fed's move, although moves by regional authorities are seen as slowing down the pace of their falls, dealers and analysts said.

Despite the worries, the Indonesian currency edged up on Thursday as the central bank intervened through buying government bonds in "large amounts" to stabilize the rupiah.

Other Southeast Asian markets also lost ground as a gloomy outlook for the U.S. economy by the Federal Reserve put a spotlight on risky emerging-market investments.

Thailand fell 3.8 percent to its lowest close since March 3, Singapore was off 2.6 percent to its 15-month closing low, the Philippines hit a near six-month low with a 2.6 percent fall, while Malaysia shed 2.2 percent to end at a more-than one-year low.

Thailand suffered foreign outflows of $87.9 million and Malaysia saw a net offshore selling of $48 million on Thursday.

The gloomy economic outlook after the Federal Reserves comments a day earlier drove World stocks to a more than one-year low. World stocks measured by MSCI fell as much as 2.4 percent to a new one-year low, while the more

volatile emerging-markets stock index was down 4.7 percent for by 0952 GMT.

The MSCI Asia Pacific ex-Japan index was trading 5.4 percent weaker at its lowest level since July 2010 by 0956 GMT.

Financial stocks led falls in the region with Indonesia's largest lender, Bank Mandiri , the biggest micro lender Bank Rakyat Indonesia , and fourth biggest lender by assets Negara Indonesia slumped more than 13 percent each.

Bangkok's Siam Commercial Bank was off 3.4 percent and Singapore's DBS was down 2.1 percent.

Shares of Singapore property stocks tumbled on fears that developers may soon start cutting prices in the face of slowing sales. CapitaLand fell 4.2 percent and City Developments lost 2.9 percent. - Reuters

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