WORSENING tensions in Indonesia and a spate of bad news drove Asian share prices and currencies sharply lower yesterday. Along with Jakarta, Singapore and Hong Kong were hit particularly hard.
Traders in many markets cited fears that the deaths of six students in anti-government protests on Tuesday followed by rioting yesterday would increase instability in Indonesia. The Indonesian stock market and rupiah currency nosedived, and dragged other markets down.
The new round of nuclear testing in India yesterday was not behind the markets' plunge in Asia. Asian financial markets were already closed when India announced the tests, despite the threats of imminent sanctions over the tests.
Jakarta's Composite Index plummeted 6.6% to close at 402.057 after falling below the key 400-point level to 393.364 at one point.
The rupiah fell to as low as 11,150 to the dollar, before retracing marginally. Matthew Pecot, president-director of PT GK Goh Ometraco, said yesterday that market sentiment was ''obviously very negative''.
Currency dealers said the rupiah's fate was now squarely tied to Indonesia's political situation.
In Singapore, the key Straits Times Industrials Index plunged 4.9% to close at 1331.98 points. It was down 6.8% an hour before close, but last-minute buy orders helped the market rally. The Singapore dollar also fell heavily, breaching the psychologically important level of 1.65 to the US dollar to reach 1.66.
In Hong Kong, traders said that weakness in property prices and the Japanese yen, and high interbank interest rates contributed to the gloom.
The Hang Seng index, already at a 15-week low after falling 2.5% on Tuesday, shed another 3.8%, finishing the day at 9469.29, its lowest level since January 27.
Weakness in Jakarta markets also spilled over to Malaysia, with the ringgit trading sharply lower against the dollar.
The benchmark Composite Index fell below the psychologically crucial 550-point level shortly before the session ended, closing 3.7% lower at 548.33 points.
The ringgit closed in Asia trading at 3.9188 to the dollar, down from 3.8200 at Tuesday's close.
Instability in Indonesia also drove Thai share prices lower, with the key index plunging 2.8% to 370.92.
The Thai baht also weakened further against the dollar. In late trading, the baht was trading at 39.10 to the dollar, down from 38.53 late Tuesday.
This has not deterred Boots the Chemist, which has announced plans to open 40 health and beauty stores in Thailand in the next two years.
In Tokyo, the 225-issue Nikkei Stock Average posted a small gain as buying from pension funds triggered a last-minute rally, finishing 0.14% higher at 15,343.81 points.
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