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SINGAPORE – Indonesia shares fell by nearly 5% on Thursday following an announcement that the capital Jakarta would restore partial lockdown measures to slow the spread of coronovirus.
The decline in the benchmark Jakarta Composite Index is in contrast to the gains seen in most markets in the Asia Pacific region. The index has been one of the worst-performing stocks in the sector so far this year, having lost more than 18% on Wednesday, while the MSCI All Country Asia Ex-Japan Index gained 3.2%.
Jakarta Governor Anees Basavadan said on Thursday that he would again oppose mass mobility restrictions from next Monday as the city’s health system is threatened by an increase in Kovid-19 cases. Jakarta was put under partial lockdown from April, but the measures were initiated in June.
According to Reuters, the restrictions set to reinstate previously imposed restrictions would be similar, except for “required” areas, to temporarily close offices such as to limit public transport services and prohibit food in restaurants.
Jakarta, a city that is home to more than 10 million people, has been the epicenter of Indonesia’s Kovid-19 outbreak, accounting for nearly a quarter of the country’s cumulative infections. According to government figures, more than 1,000 daily new cases occurred in the city in this month.
According to data compiled by Johns Hopkins University, Indonesia ranks second in Southeast Asia behind the Philippines in more than 200,000 cumulative cases, but has the largest area of deaths of over 8,000 people.
Helmi Armaan, an economist at Citi Research, said Jakarta’s plan to tighten sanctions could bring Indonesia’s “macroeconomic and financial sector risks back into the limelight.”
He wrote in a note on Wednesday, “Any type of economic impact of the ban will depend on the details of the program as well as how the new rules apply.”
The Indonesian economy, Southeast Asia’s largest, has been severely affected by the epidemic. Its GDP fell 5.3% in the second quarter compared to a year earlier – the first economic contraction since 1999.