JSX called on to withdraw new delisting policy

JAKARTA (JP): A securities investor association has urged the Jakarta Stock Exchange (JSX) to withdraw a new delisting regulation, saying that the policy could inspire listed firms to manipulate their share prices to avoid being delisted.

Chairman of the Indonesian Securities Investor Society (MISSI) HND Murdani said on Monday that the JSX should have abolished the policy altogether instead of just postponing it.

"To prevent a policy becoming a trap for investors, it's better not to have the policy at all," Murdani told reporters at his office.

Last week JSX announced it postponed several delisting rulings that had been issued in June last year. The exchange cited the country's still unfavorable economic conditions as its reason behind the delay.

One ruling said that if a company's shares was traded at below Rp 50 (about 0.52 US cents) a share for three consecutive months, that company would face delisting.

Murdani argued that the ruling could invite companies to deliberately mark down their share prices so that it could buy them out from the public.

"If the company's share prices remain below Rp 50 for almost three months, investors would panic as they fear the company might be delisted. They would dump their shares at any price," he explained.

The company, he said, would then buy its own shares to control them.

In the following days, the company could spread good news about its operation to prop up its share prices to enable it to book significant gains from its buy-out move, Murdani said.

"At worst the company might even cooperate with the JSX to have its share value lifted," he added.

He said many investors had dumped their shares of Bank Internasional Indonesia (BII), whose shares are now trading at Rp 25, when it became apparent last week that the bank faced delisting under the ruling.

Aside from BII, PT Bakrie Finance was equally threatened by the delisting ruling last week.

MISSI's general secretary Tunggul M. Butar Butar also questioned why the minimum price level was Rp 50, while many companies have a nominal value of below Rp 50 for their shares.

He said that for shares with a nominal value of less than Rp 50, setting the minimum price of Rp 50 was not relevant.

"The Rp 50 is irrelevant to a company's performance; one must look at the nominal price of its shares," he said.

Tunggul was in particular referring to several banks that floated their shares at nominal prices of below Rp 50.

As of Monday, shares of six companies were traded at below Rp 50. These included BII, Bank Universal, Bank Unibank, Bakrie Finance, PT Kasogi International, and PT Mas Murni Indonesia.

Other banks with equally low share prices were Bank Niaga, Bank Lippo, Bank Bali and Bank Danamon, all of whose shares hovered at between Rp 50 to Rp 60.

The JSX, Tunggul said, should have standardized the nominal prices for companies, or pegged the minimum share price at a nominal price of a company.

Falling under the delisting criteria are companies whose volume of transactions in the market is less than 10,000 shares per month; those whose shares are not traded for nine consecutive months; or those which have been suspended from trading for 12 months. (bkm)