Indonesian stocks go into bear market

<p>Indonesian stocks have lost value.</p>

The Indonesian stock market has entered bear territory after losing a lot of its value.

Today (August 20th) saw the Jakarta Composite Index drop by almost five per cent and in recent weeks the index has now fallen around 20 per cent.

Since it reached a recent peak in May, the market is down by 21 per cent, indicating it has slipped into bear territory.

Economists at Credit Suisse said in a note to clients on Monday that investors are worried about a crisis developing in the Indonesian financial system.

The rupiah was trading at about 10,694 to the dollar on Tuesday, which is more than ten per cent lower than at the start of the year.

"If the currency continues to devalue and the cost of borrowing goes up, consumers are likely to be squeezed by both the factors and as a result consumption will be hurt," said Tony Nash Managing director of IHS Global Insight.

Stocks across Asia were also damaged today, with the Nikkei dropping by 2.6 per cent.

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