Roller coaster ride from troubled US economy

- The Jakarta Composite Index is going on a roller coaster ride since beginning of the year: Up 3% to highest level at 2830 at second week, then down 19% in the next two weeks to 2295. It has since gone up but has not reached the level at YE07.

- Drivers are mostly global market dynamics.

- Major factors influencing the stock market are economy conditions overseas, such as concern on subprime mortgage losses and possibility of the recession in the US.

- Economy slowdown (recession, even worse) is expected to result in slower growth on Indonesian export.

- The Fed and other Central Banks around the world have taken bold and drastic measures to prevent the subprime mortgage crisis to spread.
Since the beginning of the year the Fed has cut rate by 125bp: first a 75bp cut one week ahead of its scheduled meeting at end of January, followed by a 50bp cut eight days later.

- The US government has proposed US$152b fiscal stimulus in anticipation of recession.