SINGAPORE — Indonesian stocks fell by more than 5% on Thursday to their lowest in close to three months following an announcement that capital city Jakarta will reinstate partial lockdown measures to slow the spread of the coronavirus.
The decline in the benchmark Jakarta Composite Index stood in contrast with gains seen in most markets across Asia Pacific. The index has also been one of the worst performing in the region so far this year, declining by more than 22% as of Thursday close compared with a roughly 1% gain in the MSCI All Country Asia ex-Japan Index.
Thursday's drop came a day after Jakarta Governor Anies Baswedan said he will reimpose large-scale mobility restrictions from next Monday as a rise in Covid-19 cases threatens to overwhelm the city's health system, reported Reuters. Jakarta was placed under a partial lockdown from April, but measures were eased starting in June.
Restrictions set to be reinstated will be similar to those previously imposed, such as temporarily closing offices except for "essential" sectors, limiting public transport services and forbidding dining in restaurants, according to Reuters.
Jakarta, a city that's home to more than 10 million people, has been the epicenter of Indonesia's Covid-19 outbreak, accounting for nearly a quarter of the country's cumulative infections. The city reported more than 1,000 daily new cases for most of this month, according to government data.
Indonesia's over 200,000 in cumulative reported cases is the second-highest in Southeast Asia behind the Philippines, but the country's death toll of more than 8,000 is the region's largest, according to data compiled by Johns Hopkins University.
Helmi Arman, an economist at Citi Research, said Jakarta's plans to tighten restrictions could put Indonesia's "macroeconomic and financial sector risks back in the spotlight."
"The economic impact of any retightening of restrictions will depend on the details of the program as well as how stringently the new rules are enforced on the ground," he wrote in a Wednesday note.
The Indonesian economy, Southeast Asia's largest, has been badly hit by the pandemic. Its gross domestic product fell by 5.3% in the second quarter compared to a year ago — the first economic contraction since 1999.