Brokers want clear-cut ruling on stocks value
Brokers want clear-cut ruling on stocks value
JAKARTA (JP): The association of brokerage companies called on
the stock market authorities yesterday to issue a clear-cut
guideline regarding the par (nominal) value of shares listed on
domestic exchanges.
Achmad Sofjan, the chairman of the Jakarta Securities Brokers
Club, said that the sales of shares with different par value at
the same place could, in the long run, cause a market distortion.
"There should be a limitation so that all stocks will be
treated the same," he told The Jakarta Post while commenting on
media reports about the plan of several large capitalized
companies to split their stocks by halving their par value to Rp
500 (22.88 U.S. cents) from Rp 1,000.
The share split move emerged following the listing of the
state-owned Indosat's shares on the Jakarta and Surabaya stock
exchanges. The par value of Indosat's shares are set at Rp 500
each, while those of other shares on the two markets are all
fixed at Rp 1,000.
The market authorities denied that it was a special privilege
given to Indosat, which is also listed on the New York Stock
Exchange (NYSE).
Hasan Zein Machmud, the president of the Jakarta Stock
Exchange (JSX), said there is no regulation requiring issuing
companies to set the par value of their shares at Rp 1,000 each
and the fact that all listed companies, except Indosat, have a
par value of Rp 1,000, is just coincidental.
Double
Sofjan, also an executive of Merincorp Securindo, said that if
issuing companies change the nominal value of their shares to Rp
500 from Rp 1,000, it will double their issued shares. "As a
consequence, the share price will automatically drop also by 50
percent in line with the 50 percent cut in their nominal value,"
he said.
The lower prices would give investors more of a chance in
having higher investment returns, he said. But he added that the
promising prospect could encourage all companies to do the same,
or even set their nominal value even lower than Rp 500.
"The listing of shares at different par values will,
therefore, make the market very complicated," he said, adding
that it could create the impression that the Indonesian exchanges
are poorly managed.
Other securities analysts said, however, that the share split
through the cut in the shares' nominal value would cause no harm
to either the investing public or the market mechanism.
"Besides improving the liquidity, the share split, which
automatically lowers share prices, would involve more individual
buyers," said a securities analyst of a local brokerage firm.
(hen)