Competition among brokerage firms to be tighter<\/p>\n
JAKARTA (JP): Competition among brokerage firms will be
\ntighter next year because several major foreign brokerages will
\nenter the Indonesian capital market, said a director of the
\nJakarta Stock Exchange (JSX), Stanyslaus Say.<\/p>\n
Stanyslaus told The Jakarta Post on Friday that four foreign
\nsecurities companies -- Merrill Lynch from the United States,
\nHong Kong-based Solomon Brothers, Capital Securities from Taiwan
\nand a Malaysian firm, Rashid Hussain -- will operate here next
\nyear.<\/p>\n
An analyst from PT Barclay Niaga Securities, Steven Kenny,
\ntold the Post that competition was already tight this year as
\nreflected by the many securities companies that suffered losses.<\/p>\n
Kenny said one way to boost profit is to increase the number
\nof quality issues that have realistic initial public offerings.<\/p>\n
Kenny said that although the Indonesian market, as an emerging
\nmarket, was seriously hurt by the Mexican financial crisis late
\nlast year, it was not the only reason for the drop in share price
\nof some newly listed companies.<\/p>\n
\"I think the trauma of the Mexican crisis is over now and we
\nwill see a lot of foreign institutions returning here next year.
\nBut the quality issue remains the key point for market growth,\"
\nKenny said.<\/p>\n
He also foresees American brokerage firms and institutional
\ninvestors reducing their participation in Indonesia because there
\nwill not be another big deal like Telkom, despite the
\ngovernment's plan to privatize three more state-owned
\nenterprises.<\/p>\n
Losses<\/p>\n
Mas Ahmad Daniri, another director of the JSX, projected that
\napproximately 70 of the 197 securities firms listed on the JSX
\nlost money this year.<\/p>\n
He said that during the first six months, 97 firms reported
\nlosses, 84 booked profits, 17 were inactive and one, PT Sun Hung
\nKai Indonesia, was suspended from the exchange.<\/p>\n
Sun Hung Kai's suspension was lifted by the Capital Market
\nAdvisory Agency last week.<\/p>\n
Daniri said that after the implementation of the Jakarta
\nAutomated Trading System on May 22, the number of brokerage firms
\nwith a daily trading value of between Rp 500 million (US$216,000)
\nand Rp 1 billion increased from 64 to 87.<\/p>\n
Brokerage firms with a daily trading value of above Rp 1
\nbillion increased from 43 to 57.<\/p>\n
The highest daily trading value of Rp 28 billion was achieved
\nby 12 brokerage firms.<\/p>\n
JSX's daily trading volume rose from 21.6 million shares worth
\nRp 104 billion before May 22 to 42 million shares valued at Rp
\n130.4 billion after the exchange became automated.<\/p>\n
The trend, Stanyslaus said, showed that the automated system
\nhelped securities companies better their performance. Increases,
\nhowever, could only happen if the companies are backed up by a
\ngood research department and a strong capital base, he stressed.<\/p>\n
He pointed out that almost 70 percent of the total
\ntransactions were executed by the 20 most active brokerage firms,
\nall of which are supported by capital and good research
\ndepartments.<\/p>\n
PT Makindo, a domestic company, stayed at the top of the 20
\nmost active brokerages in May, June, July, October and November.<\/p>\n
The most active brokerages included HG Asia Indonesia, Jardine
\nFleming Nusantara, Barclays Niaga Securities, WI Carr Indonesia,
\nCredit Lyonnais Capital and Wardley James Chapel Indonesia.<\/p>\n
The top 20 brokerages accounted for 63 percent of total
\ntransaction value on the JSX in November. (08)<\/p>",
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