In order to support the fund raising through the capital market, PT Indonesia Stock Exchange (IDX) eased the requirements of debt securities listing - Photo: Special

JAKARTA (TheInsiderStories) – The coronavirus become new scourge for the global economy, especially Indonesia. Its pandemic is more dangerous than trade war. Its not surprising if the market installing defensive mode and no one wants to take the risk. All just dare to play it safe.

On Thursday, the Jakarta Composite Index (JCI) fell 2.69 percent to 5,535.69 compared to previous day, the lowest level since March 16, 2017. Its also happened to Indonesian Rupiah, i a matter of days, touched the level 14,000 again, after lowered by 0.61 percent to 14,025 a US Dollar amid the pandemic.

Global shares also plunge amid brutal selling by investor and headed for the worst week since the world financial crisis in 2019. Dowjones stock index dropped sharply by 1,200 points as fears of coronavirus outbreak.

In United States (US), the S&P closed down 4.4 percent, The Dow Jones Industrial Average was down nearly 4.4 percent and Nasdaq Composite slumped 4.6 percent as investors feared a jump in coronavirus infections in the country could derail economic growth.

According to Alfred Nainggolan from Praus Capital Research, in general the capital flight go to safe haven instruments such as gold. While, director of PT Indonesia Stock Exchange, Laksono Widodo, said his office has prepared a number of steps in responding to the movement of the domestic market.

He said, the bourse has a procedural crisis management protocol (CMP) stage to anticipate the market. If the market fell more than 2 percent, the authority watch the market closely and analyzed various sentiments that pressured the index, both from global and domestic factors.

However, he continued, if the market conditions continue to erode and the decline continues, the IDX will start taking the next step. Based on CMP procedure, if the decline touches 5 percent, said Widodo, the bourse has entered a period of crisis.

If that happened, the agency will begin coordinating with Indonesian Central Securities Depository and the Indonesian Clearing and Guarantee Corporation and the next steps with the Financial Services Authority (FSA).

Then if the market continues to fall to the level of 7.5 percent, the IDX will make decisions together with the FSA and the ministry of finance. At this stage, he added, CMP will also start running.

“If it continues to fall to the 10 percent level, then the market will be closed or suspended for a while,” adds by Widodo.

He assessed that the market has not yet entered a critical stage and they are still monitoring. According to him, the current condition is more caused by global pressure due to the increasingly widespread corona outbreak or COVID-19.

On the Rupiah weakening, Bank Indonesia (BI) has intervened the market but not strong enough to curb the Rupiah from the global pressure.  Monex Investindo Futures’ analyst, Faisyal rated, the negative trend on the money market in the last eight days will continue because, there is no new sentiment, both from internal or external.

The current sentiment only from the spread of the coronavirus. As a result, the trend in the movement of the Rupiah will not change much until next week.

Bank Permata economist, Josua Pardede also has a similar view. The market is still worried about the growing of the virus spread outside China. Beside, there is no domestic catalyst strong enough to safeguard the Rupiah.

Today, he estimates, the local currency tends to weaken with a range of 13,850 – 13,950 per US Dollar. While, Faisyal sees between 13,860 – 14,000 over the Greenback.

Written by Staff Editor, Email: theinsiderstories@gmail.com