JAKARTA - INDONESIAN shares slid over 5 per cent on Monday after a three-day trading halt as the government raised its guarantee on bank deposits to help restore confidence in the economy in the face of the global credit crisis.
The measures, announced by Finance Minister Sri Mulyani Indrawati, also allow more room for the central bank to pump in short-term funds to ease tight liquidity conditions resulting from the world's worst financial crisis in decades.
China stocks fall
SHANGHAI - CHINESE stocks fell on Monday morning on
heavy selling of real estate developers and resource shares.
The benchmark Shanghai Composite Index dropped 3.4 per cent, or 68.82 points, by midday to 1,931.75.
'The government can take preventive action to maintain people's trust in the banking system by increasing the maximum deposit guaranteed by the deposit insurance agency,' Ms Indrawati told a press briefing.
Indonesia's move to guarantee up to 2 billion rupiah (S$300,000) in bank deposits follows similar steps taken by governments across the world aimed at tackling the biggest financial crisis since the Great Depression.
The stock exchange's benchmark composite index fell 5.7 per cent in morning trade, while the rupiah MIDR recouped earlier losses after the central bank was seen by traders selling dollars in the market to try to prop up the weakening currency.
The stock exchange halted trade last Wednesday after the benchmark composite index had dropped by more than 20 per cent in just three sessions since Sept 29.
It had been due to reopen its stock market on Friday, but scrapped that decision after a fresh global rout in equities and despite new measures aimed at calming fears that Indonesia's economy faced a crisis.
The Jakarta stock market, which had a market capitalisation of US$135 billion (S$199 billion) on Tuesday, has lost 47 per cent this year.
Traders said sellers were being kept partly at bay a stock exchange's move to impose a 10 per cent limit on stock price moves.
The introduction of the 10 per cent limit, either up or down, will prevent investors from 'selling too fast, too quick", said David Chang, head of research at UOB Kay Hian.
'Today is going to be more positive because of some measures taken in the stock market to prevent stocks to go down more than 10 per cent,' he added.
In the currency market, traders in Jakarta said the central bank was suspected to be selling dollars at various levels around 9,830. -- REUTERS
