Indonesia opened its stock market after suspending trading for three
days last week, with shares stabilizing after the government announced
new measures to safeguard the economy. VOA correspondent Nancy-Amelia
Collins in Jakarta has more.
Indonesian shares stabilized Monday, after the government announced it would raise guarantees on bank deposits up to $193,000 and make it easier for commercial banks to obtain short-term loans from the central bank. The benchmark JSX ended the day nearly one percent higher.
Finance Minister Sri Mulyani Indrawati announced the new measures, saying the government "sees a threat from the global financial crisis that could destabilize Indonesia's financial system."
Last week, the government announced initial measures to deal with the global financial crisis that include easing reserve requirements for commercial banks, making it easier for listed firms to conduct share buybacks, and easing accounting rules on the fair value of assets.
Authorities suspended share trading last Wednesday after stocks lost more than 20 percent for the shortened week.
Economist Erwan Teguh from Indonesian bank CIMB Niaga says the financial problems being experienced by Indonesia's biggest investment company, PT Bakri and Brothers, remain a concern for the Indonesian market.
"I think the key of the market remains whether there is going to be any immediate solution to the case of the Bakri group because of their debt position and that remains to be seen," he said.
PT Bakri and Brothers, says it is talking with foreign and local investors about selling some of its subsidiary company shares in a bid to settle its $1.25 billion debt.
Trading in shares of the six Bakri and Brothers subsidiaries, controlled by the family of Chief Social Welfare Minister Aburizal Bakri, have been suspended since last Tuesday, and the company has sought to extend the trading halt until its financial problems are settled.
Economist Erwin says solving the Bakri company's problems are vital to the recovery of the Indonesian market.
"Prior to being suspended, their group of companies normally occupy about a third of the daily trade," he said. "Obviously they are very, very, very critical to the daily transactions. If there is no solutions to whatever problems that they are facing at the moment, then I think it going to be very difficult to say whether the measures as taken by the government will be sufficient to stabilize the stock market going forward - even if we were able to see a continued or sustainable market elsewhere in the world."
The Indonesian government also revised its economic growth rate for 2009 about one-half point lower.