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May 20, 1998, 12:01 a.m. EDT

Indonesian Shares Climb 6.4% After Suharto Reveals Plans

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By Sara Webb and Douglas Appell

Indonesian stocks surged 6.4% as President Suharto announced he would introduce reforms, call new elections and eventually step down.

But investors in Asia greeted the news with some skepticism, and markets in the region responded coolly or with only modest rallies. They had feared that big demonstrations originally planned for Wednesday across Indonesia would erupt in further violence and once again wreak havoc in the region's stock markets. However, Amien Rais, a key opposition leader, called off the protest early Wednesday, saying he wanted to avoid violence.

On Tuesday, Japan rose 1.1%, South Korea gained 1%, Malaysia rose 0.8% and Hong Kong edged up 0.4%. However, Singapore, a barometer for fears about Indonesia because of heavy cross-border lending and property purchases, shed 1%. Thailand dropped 3% as investors dumped finance-sector shares following the Bank of Thailand's decision to force seven finance companies to merge.

In Europe, markets rose as fears evaporated that the Federal Reserve would raise U.S. interest rates at its meeting later in the day -- justifiably, as the Fed voted to hold rates steady. Italy surged 2.9%, France jumped 0.9%, Germany gained 1.8% and London rose 0.9%.

In Russia, the stock market rebounded 3.9%, but not enough to make up for the previous day's 12% plunge. Monday's steep decline was prompted by fears of a devaluation, forcing the central bank to jack up interest rates.

The Dow Jones World Stock Index rose 1.42 points, or 0.76%, to 189.14.

President Suharto's gambit to engineer a face-saving exit from Indonesian politics did little to mollify his domestic critics or foreign investors Tuesday. Most markets reacted coolly, and many investors remain wary of piling back into the region.

Asian currencies got a modest lift from the news, underscoring continued worries about Indonesia's political stability.

Mr. Suharto's move "doesn't make me enthusiastic about stocks" in the region, said Deep Kapur, regional strategist with Salomon Smith Barney in Singapore. Without any more details, it remains to be seen "whether it actually happens and how long it takes," he said.

In Jakarta, the composite stock index surged 6.4% to 413.82 after Mr. Suharto announced early in the afternoon that he would call a general election "as soon as possible" in which he wouldn't run, after orchestrating a reform effort. In early trading on Wednesday, the index was up 0.91 to 414.73.

The rupiah, which had touched 14,000 against the dollar, rebounded to 11,900, up from Monday's level of 12,150. The dollar was trading at 11,350 rupiah in early Asian trading on Wednesday.

Trading volume in the stock market was low Tuesday, and gainers outpaced losers by 80 to 10, with 25 stocks unchanged. Bimantara Citra, the conglomerate controlled by one of Suharto's sons, jumped 42% to 425 rupiah.

Meanwhile domestic-telecommunications stock PT Telekomunikasi Indonesia /zigman2/quotes/206487502/composite TLK -0.80% rose 4.3% to 3,650 rupiah, while cigarette maker PT Gudang Garam jumped 8.3% to 7,850 rupiah.

In Tokyo, the Nikkei 225 index rose 167.18 points to 15551.65, helped by developments in Indonesia as well as investor interest in those companies which have recently announced share buybacks. At the end of the morning session Wednesday, the Nikkei was up 164.38 points to 15716.03.

On Tuesday, advancing issues beat decliners 709 to 378, while 155 issues were unchanged.

News that South Korea's Pohang Iron & Steel /zigman2/quotes/209201002/composite PKX +1.44% Co., known as Posco, was considering a strategic alliance with Nippon Steel of Japan sent Nippon Steel's share price 3.7% higher to 223 yen, while Posco's shares rose 4.1% to 61,000 won. As part of the deal, Nippon Steel and Posco would acquire stakes in each other.

$ 22.30
-0.18 -0.80%
Volume: 193,999
July 6, 2020 4:00p
P/E Ratio
Dividend Yield
Market Cap
$21.64 billion
Rev. per Employee
$ 38.69
+0.55 +1.44%
Volume: 250,033
July 6, 2020 4:00p
P/E Ratio
Dividend Yield
Market Cap
$12.08 billion
Rev. per Employee
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