JAKARTA, Indonesia -- Indonesian stock trading was frozen indefinitely Friday to "avoid deeper panic" as global markets plunged over concerns stemming from the U.S. financial crisis, the bourse president said.
A suspension was imposed on the Jakarta Stock Exchange on Wednesday in response to sudden, steep loses, but authorities had planned to resume trading Friday morning.
The last-minute reversal came just minutes before the scheduled reopening in Jakarta as Asian stocks tumbled again in response to a whopping 7.3% decline of the Dow Jones Industrials Average. In Tokyo, Japan's main index sank more than 10% Friday morning.
"The situation is not yet conducive. This is to prevent deeper panic," bourse President Erry Firmansyah told The Associated Press. "It will be closed indefinitely while we will continue to monitor."
Heavy selling by foreign investors drove down the benchmark JSX index 21% this week and it is down 47% this year, making it one of the worst performers in Asia.
On Thursday, the Indonesian government and Bank Indonesia took steps aimed at boosting liquidity and averting a credit crunch. That came after an ill-timed hike in interest rates on Tuesday to fight inflation.
President Susilo Bambang Yudhoyono urged state companies to buy up their own shares, doubling to 20% a limit on those purchases and scrapping compulsory shareholder approval, said Robinson Simbolon, a senior capital market regulator.
"President Yudhoyono held a special meeting late on Wednesday to discuss the market situation and gave instructions to state-owned firms to buy back shares to prop up prices," said State-Owned Enterprise Minister Sofyan Jalil.
In another measure, regulatory authorities will lower a minimum reserve requirement for corporations, a step aimed at freeing up billions of dollars in liquidity, said Miranda Gultom, deputy governor of Bank Indonesia.
Indonesia has more than 100 state-owned corporations active in mining, utilities, telecommunications and commodities. The buyback plan comes precisely as the government sought to divest commercial holdings and attract foreign capital.
Among the main publicly traded government businesses are cement manufacturer PT Semen Gresik, telecommunications monopoly PT Telkom and PT Timah, the world's largest exporter of tin.
Leaders in Indonesia — which suffered a devastating financial meltdown in the 1997-1998 Asian financial crisis — have rushed to reassure investors that the fundamental economy remains strong. At the same time, the Finance Ministry revised downward growth targets for 2009 to between 6.0 and 6.1% from 6.3%.