Delay in SSX-JSX merger hailed

JAKARTA (JP): Securities analysts hailed on Thursday the decision by the Surabaya Stock Exchange (SSX) to cancel its merger plan with the Jakarta Stock Exchange (JSX).

The president of Arga Artha securities, Nurkhamid, said the Surabaya-based market should be directed to trade shares of small and weak companies while the Jakarta bourse would trade blue chip shares.

The merger plan failed to gain the support from a large enough majority of members of the SSX in a meeting on Wednesday.

The results of the vote taken of the bourse's 81 members were 51 for the merger, 28 against and two abstentions.

"The 51 merger-proponent vote only made up about 63 percent, while the requirement for the merger is 75 percent," an SSX legal officer said.

According to Nurkhamid, many companies listed on the JSX could no longer meet the listing requirements and now face being delisted.

"This kind of company will go nowhere but to the Surabaya market," he said, adding that the JSX should be more selective in receiving new listings in order to improve its international image.

"It is important for JSX to be only for good companies which are respected by international observers."

Fundamentally strong companies can stay in JSX, while the weak, along with other small business companies with good prospects can be listed in SSX, he said.

A director of a foreign security house in Jakarta also said that SSX is still needed to accommodate the small business companies who want to go public.

"Small enterprises need to be given more attention, especially in times of economic difficulties like now," he said.

He said SSX is expected to help the country's small enterprises by having less strict listing requirements exclusively adapted for the country's small business sector.

The bourse members of both JSX and SSX in November 1998 approved the planned merger of their bourses, and appointed an evaluation team to study the plan.

The team concluded that a merger was needed to regain efficiency. (udi)