TEMPO.CO, Jakarta - The Indonesia Stock Exchange (IDX) authority claimed that the current stock and capital market turmoil is mild compared to what happened in 2008 and 1998.
Reasoning that all indicators of economic strength are far better than in 1998 and 2008, IDX president director Tito Sulistio said the threat of a financial crisis will not last long.
According to Tito, in 1998, 70 percent of companies listed on the IDX recorded a loss. As for this year, 80 percent are still posting profits and are in good condition.
As of yesterday, the Jakarta Composite Index (JCI) was still on a downtrend, closing 2.5 percent down to 4,305 bps—the lowest level since January 2014. Compared with its highest level of 5,523 bps on April 7, 2015, the index had plunged by 22 percent.
On a year-to-date basis, the JCI is the world's deepest dropping major stock index.
Bank Mandiri president director Budi Gunadi Sadikin agrees with Tito's projection. He said that the current economic slowdown is nothing compared to 1998 when the stock market was destroyed completely and inflation reached 60 percent. In 2008, inflation reached more than 10 percent, while this year only it only reaches 7 percent.
Moreover, Budi said, the index value in 2008 dropped to 60 percent, but this time the drop is only 20-25 percent. In 2008, long-term interest bank rates reached 21 percent, while this year's is under 10 percent.
"If we survived 2008, then we should be able to survive this year as well," he said.
MAYA AYU | INGE KLARA SAFITRI | ADITYA BUDIMAN | SINGGIH SOARES