Bapepam defends price intervention in primary market<\/p>\n
JAKARTA (JP): Chairman of the Capital Market Supervisory
\nAgency (Bapepam) yesterday defended the agency's price
\nintervention on the primary market.<\/p>\n
\"In emerging markets like Indonesia, price intervention is
\nstill needed. But it is a temporary measure,\" Bacelius Ruru told
\nreporters.<\/p>\n
The Bapepam chairman also dismissed fears that widening the
\nceiling of foreign equity holdings in portfolio investments from
\nthe 49 percent level could destabilize stock trading.<\/p>\n
Speaking to reporters during the afternoon break of the PACAP
\nCapital Market Conference, Ruru said domestic investors still
\nneed time to enter a \"full market mechanism era.\"<\/p>\n
\"We are now in the process of educating our domestic investors
\nand when they are mature enough, the free market mechanism will
\nbe enforced,\" he said.<\/p>\n
Bapepam's policy of limiting share prices during the primary
\noffering at a maximum of 13 times the price earnings ratio has
\nbeen widely criticized by capital market experts at the
\nconference.<\/p>\n
Analysts said that if the price cap is maintained, the capital
\nmarket will no longer be attractive for potential share issuers.<\/p>\n
Ruru, however, argued that if share issuers are free to set
\nthe prices of their shares, it could hurt the investing public,
\nespecially local investors, who often buy shares without properly
\nassessing the risk first.<\/p>\n
No disturbance<\/p>\n
\"Our price intervention is not really disturbing the free
\nmarket principle as it is only imposed during the primary
\nmarket,\" he said. \"When shares are listed and being traded on the
\ntrading floor, it is supply and demand which determines price
\nfluctuations.\"<\/p>\n
The Bapepam chairman also came out against the suggestion,
\nsaying that the increase in foreign equity holdings could harm
\nstock trading.<\/p>\n
\"The massive withdrawal of foreign investors from the market
\nis, of course, negative, but we should not be too afraid as long
\nas we are able to maintain trading transparency and fair
\npractice,\" Ruru said, adding that if the market is promising,
\nforeign investors will automatically return again even after a
\nmassive pullout.<\/p>\n
Finance Minister Mar'ie Muhammad said here on Thursday that
\nthe government is still \"seriously\" studying the possibility of
\nadjusting the ceiling of the equity ownership imposed on foreign
\ninvestors in the capital market to the government's new ruling on
\ndirect foreign investment.<\/p>\n
The new investment ruling issued early last month allows
\nforeign investors to have an equity holding of up to 95 percent
\nin a joint venture with local partners. While the foreign
\nownership restriction on direct investments has been eased
\nseveral times in the past to attract foreign investors, the
\nrestriction on foreign holdings in the capital market remains at
\n49 percent.<\/p>\n
The Bapepam chairman said that founders of listed companies
\nshould not be afraid that allowing foreign buyers to buy more
\nthan 49 percent of listed shares will lead to a hostile takeover
\nby foreigners.<\/p>\n
\"The chance of a hostile takeover is minimal as founders have
\nthe right not to sell their stocks in order to maintain their
\ncontrol in the company,\" Ruru said. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bapepam-defends-price-intervention-in-primary-market-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}