- The Washington Times - Wednesday, December 29, 2004

TOKYO — The Indonesian and Indian stock markets hit record highs yesterday on positive economic news, in a sign of the disconnect between investors and the poor who are suffering from the tsunami that has killed at least 77,000 people.

For investors, the important news since Sunday has not been the catastrophic death toll in remote stretches of the Indian Ocean. More than half the dead are in Indonesia.

Instead, they have reacted to news that foreign insurers were largely unscathed by the killer waves and that major tour operators have been forced to reroute vacationers.

“Obviously, with a lot of loss of life, a lot of time is needed to clean up the mess, bury the people and find the missing. But it’s not necessarily a really big thing in the economic sense,” said Eddie Wong, chief Asian strategist for ABM Amro.

“The damage to the good hotels seems not to be serious. Most of the damage was to huts on the seaside,” he said of the situation in the Thai resort island Phuket.

“And even if some hotel chains may be affected, there are also economic beneficiaries such as cement [companies],” he said.

International analysts said the market effect was seen as most significant in Thailand and Sri Lanka because in those countries foreigners supporting the vital tourism industries were killed.

In Indonesia, hard-hit Aceh was already off-limits economically because of insurgency.

Aceh’s most important resources are oil and gas, to which there have been no reports of damage, said Wilianto Ie, senior analyst with CLSA Indonesia.

“It is a big humanitarian issue, but the only concern from an economic point of view is whether the government has the money to rebuild Aceh quickly and help people there, and with so many donor countries and donations at least the burden will not change the outlook of the Indonesian economy,” he said.

The Jakarta Stock Exchange hit a record high yesterday on expectations of strong 2005 corporate earnings and gross domestic product growth after international credit agencies praised Indonesia’s economic restructuring.

In India, the Bombay Stock Exchange inched above its record previous close. Bombay dealers have been cheered by such factors as global oil prices, which fell Tuesday and then rose yesterday.

“It is not that the broking community is indifferent to disasters or feelings,” said Vijay Tilakraj, manager with the Cholamandalam Securities brokerage firm in Bombay.

“They are very much concerned, but the reaction would have been seen if business had been affected. Business sense probably tends to overrule everything else,” he said.

Analysts said many investors were on vacation this week, and those at work were taking a wait-and-see approach.

Western countries’ markets have largely ignored the tsunami, with Wall Street springing on Tuesday to a 3-year high on U.S. consumer confidence data. Yesterday, the Dow Jones Industrial Average fell 38 points to 10,817.

“From an Australian corporate perspective, and for developed markets generally, there’s pretty slim exposure to these countries,” said Adam Dixon, a dealer at Ausbil Dexia in Sydney.

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