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.

Learn about the Asian markets and CFD trading at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.