Trading suspended in Jakarta

FT 08/10/09

Intervention after near-panic conditions
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Repo market seen as key factor in crisis
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Trading on the Jakarta stock exchange was suspended indefinitely yesterday after shares on the bourse tumbled more than 10 per cent i 90 minutes amid a liquidity crisis triggered by defaoults on share deals by leading traders and investors.
Exchange authorities were forced to intervene after near-tpanic conditions on the market, which has tumbled 21 per cent shince monday, making it one of the hardest hit bourses in the world.

A key problem is that many brokers relied on the so-called repo market for fnance to facilitate deals. In this market, a seller of debt securities promises to buy them back later for a mutually agreed price.

A family of Aburizal Bakrie, was at the centre of the crisis after it did not meet its market obligations to complete deals, a senior government official and capital market executives told the Financial Times.
Six Bakrie-linked companies were suspended on Tuesday.

The Bakrie family declined to comment , but several people with knowledge of the situation said the family was urgently megotiating to raise liquidity to meet its obligation.