Barings suspends trading<\/p>\n
JAKARTA (JP): Barings Securities Indonesia (BSI), a major
\nbrokerage company on the Jakarta Stock Exchange (JSX), suspended
\ntrading activities yesterday in the wake of the derivatives
\ndealing scandal involving its London-based principal company.<\/p>\n
Achmad Daniri, a JSX director, said that BSI was voluntarily
\nsuspending its trading activities until the financial scandal of
\nits parent firm settles down.<\/p>\n
\"BSI told us in the morning about its voluntary suspension. It
\nalso promised to settle all its financial responsibilities for
\nall its transactions made until Friday,\" Achmad told The Jakarta
\nPost about the position of Baring Bank's Indonesian affiliate.<\/p>\n
Barings Bank, a London-based merchant bank, was placed in
\nadministration by London's financial authorities after losing
\nmore than $750 million in unauthorized derivatives trading in
\nSingapore.<\/p>\n
BSI, an affiliate of the British bank, topped the list of the
\nmost active brokerage companies in Indonesia last year, with
\ntotal transactions of around Rp 2.84 trillion (US$1.32 billion).<\/p>\n
Last week, the brokerage firm took the fourth position among
\nthe most active dealers on JSX, with total turnovers of over Rp
\n54.56 billion (US$25.37 million).<\/p>\n
Richard Fischer, an executive of BSI, refused to comment on
\nthe trading suspension and said only that his company would try
\nto do its best for its clients.<\/p>\n
\"I have no comments right now...I will tell you later,\" he
\ntold the Post about the financial crisis of BSI's parent company.<\/p>\n
BSI's president, John Marshall, said in a statement here last
\nnight that BSI is a separate legal entity and is not subject to
\nthe British administration order, which has been imposed on other
\nparts of the Barings group.<\/p>\n
\"The unauthorized activity did not involve PT Baring
\nSecurities Indonesia in any way and the company's balance sheet
\nreflects the strength of its underlying securities trading and
\ncorporate finance business,\" Marshall said.<\/p>\n
He said BSI intends to continue operations and to meet all
\nobligations entered into at present. However, no new transactions
\nwill be entered into pending completion of discussion with
\nvarious parties.<\/p>\n
Markets<\/p>\n
Share prices on major Asian markets including Tokyo, Taiwan,
\nSingapore and Malaysia as well as Sydney were battered by panic
\nselling yesterday in a domino reaction to the Barings crisis.<\/p>\n
The fragile pound sterling crashed to a record low against the
\nGerman mark and stocks fell worldwide yesterday.<\/p>\n
Investors absorbed the uncomfortable news that a 28-year-old
\nBarings trader in Singapore had apparently lost more than the
\nbank's worth through investments in stock futures contracts in
\nJapan.<\/p>\n
The Tokyo stock market plummeted 3.8 percent, with the Nikkei
\naverage tumbling 664.24 points to close at 16,808.70, its lowest
\nsince December 8, 1993. Sterling sank to a fresh record low of
\n2.2950 marks in early European trading after dropping to 2.2993
\nmarks in Asia and it continued weak in European trading. By 1130
\nGMT it was trading at 2.3055 marks in London.<\/p>\n
\"The pound just stepped off a cliff this morning,\" said a
\ndealer at a British bank in Sydney.<\/p>\n
The London stock market opened nearly 1.3 percent weaker, but
\nlater regained some of its composure. At 1130 GMT the Financial
\nTimes-Stock Exchange index of 100 leading shares was down 23.7
\npoints at 3,014.0. The Paris bourse retreated about one percent.
\nIn several countries, bank shares bore the brunt of the day's falls.<\/p>\n
The one bright spot among major world stock markets has been
\nWall Street, which on Friday closed at a record high, but it too
\nis likely to be nervous about the new blow to world confidence.<\/p>\n
Analysts in London were quoted by Reuter as saying money was
\nheading into safe havens, particularly the German and Swiss
\ncurrencies.<\/p>\n
\"The mark is gaining in strength as a European safe-haven
\ncurrency,\" said Eric Fishwick, senior analyst at Japanese bank
\nIBJ International. \"We're seeing massive movement into the mark,\"
\nsaid Ian Francis, foreign exchange manager at Commerzbank in
\nLondon. \"Uncertainty in other markets is causing it -- there are
\nproblems and political worries across the board.\"<\/p>\n
Securities analysts in Jakarta, however, played down the
\nimpact of the futures dealing scandal on the local market despite
\nthe leading position of Baring's operation in Indonesia.<\/p>\n
\"The people are, of course, afraid about the possible sell-off
\nof Baring's holdings. But I don't think there will a big impact
\non the local exchange,\" said FT Chong, a senior capital market
\nanalyst at Bank Dagang Nasional Indonesia.<\/p>\n
Securities dealers said that trading activities on the JSX
\nwere normal, with the JSX Composite Index declining only slightly
\nto 452.56 yesterday from 454.69 last Friday.<\/p>\n
Daniri, the JSX director, also saw no significant impact of
\nthe futures trading scandal on the local market, saying that the
\nBritish brokerage company's own portfolio investment on the local
\nmarket is too small to affect the market.<\/p>\n
\"Baring's own portfolio investment is not so significant and I
\nthink the impact will be also minimal,\" Daniri said when he was
\nquestioned about Baring's possible sell-off on the JSX. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/barings-suspends-trading-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}