Market panic eases after Suharto speech
Posted at 6:38 a.m. PDT Tuesday, May 19, 1998
HONG KONG (AP) -- From Singapore to Seoul, Asia's battered
markets took heart today from Indonesian President Suharto's
announcement that he will institute reforms, call new elections and
ultimately step down.
Nowhere was the reaction as strong as in beleaguered Indonesia.
Although trading volume was low, the JSX Composite Index surged
24.906 points, or 6.4 percent, to 413.824 on Suharto's announcement.
The Indonesian currency was trading at 12,125 rupiah to the U.S.
dollar, unchanged from its close Monday, after recording a low of
13,700 against the dollar.
Currencies and stocks across the region fell sharply early today as
markets anticipated more trouble in the island nation. Panicky selling
gripped the market in Jakarta, and Indonesia's woes dragged down
many regional markets.
Suharto said he would institute reforms and organize new elections, and
that after those elections, he would not continue his 32 years in power.
He did not give a timetable.
But traders said the speech was enough to give hope that Indonesia
could avoid a continuation of the violence that claimed 500 lives last
week.
In Tokyo, the news from Indonesia one of the few positives helping to
counteract uncertainty over the Japanese economy and Asia's
prospects.
The benchmark 225-issue Nikkei Stock Average climbed 167.18 points,
or 1.08 percent, closing at 15,551.65 -- the highest finish in more than
two weeks. On Monday, the average had gained 141.61 points, or 0.93
percent.
Meanwhile, the U.S. dollar rose against the yen as demand for the
American currency was spurred by lingering fears of further instability
in Indonesia.
The dollar was quoted at 135.92 yen in late afternoon, up 0.62 yen from
late Monday in Tokyo but below its late New York rate of 136.25 yen
overnight.
As far away as South Korea, the currency rose in response to the
news from Indonesia. The South Korean won, which fell from
Monday's close of 1,444 to the dollar to 1,464 on Tuesday, rebounded
after the news and was trading at 1,437.
On the Seoul Stock Exchange, the key Korea Composite Stock Price
Index rose 3.53 points, or 0.9 percent, to 362.53.
Thai share prices tumbled because of a sell-off in the banking sector as
the central bank's takeover of seven finance companies raised fears
that its crackdown on the industry is far from over.
The Stock Exchange of Thailand index plunged 10.75 points, or 3.0
percent, to 346.46.
Philippine shares also closed sharply lower as investors unloaded their
holdings ahead of the anniversary of Indonesia's independence
movement Wednesday, which many fear may lead to more violent
riots.
The Philippine Stock Exchange Index of 30 selected issues fell 56.50
points, or 2.7 percent, to 2,068.91.
In Singapore, share prices also fell as a rally following Suharto's speech
failed to last. The benchmark Straits Times Industrial Index fell 13.12
points, or 1 percent, to 1,278.62.
Share prices in Hong Kong rebounded after Suharto's speech. The
Hang Seng Index rose 37.14 points, or 0.3 percent, closing at 9,449.11.
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