JSX threatens to delist four publicly-listed firms

JAKARTA (JP): The Jakarta Stock Exchange (JSX) is threatening to delist four publicly listed companies whose shares have not been traded for the last six consecutive months, the bourse's trade director said over the weekend.

"We have sent warning letters to the four companies and we are waiting for their responses," Mas Achmad Daniri said.

The companies are PT Great Golden Star, whose share price was recorded at Rp 9,900 (US$4.10) last Friday, PT Lenggang Makmur Plastic, Rp 1,425, PT Pool Asuransi Indonesia, Rp 3,700, and PT Asuransi Bina Dharma Arta, Rp 1,500.

JSX has the right to delist its members for several reasons, including the lack of trading on their shares for six consecutive months, the number of their shareholders being less than 100 for three consecutive months, manipulating their financial statements, their total equity is less than Rp 3 billion or they suffer losses for three consecutive years.

JSX must announce a delisting plan not less than 30 days in advance of the effective delisting date.

Several companies have been delisted from the JSX in the last two years. They included PT Praxair, PT Singer Indonesia and PT Textronics.

According to Indonesian Capital Market Supervisory Agency (Bapepam) chairman I Putu Gede Ary Suta, illiquid shares not only harm their issuers and investors but also the capital market as a whole.

"Delisting is one of many sanctions aimed to encourage share issuers to improve the liquidity of their stocks," he said.

Daniri said over the weekend that JSX would give the four companies the opportunity to enhance the liquidity of their shares on the capital market.

"If their share liquidity cannot be improved, we will delist them," he said.

He acknowledged that shares could be inactive on the capital market for a long period of time for several reasons. "Shares, for example, can be inactively traded if the executives of the companies are not transparent to their shareholders," he said. "Another reason is that the companies perform badly which discourages investors from buying their shares."

The four companies still have the opportunity to hold a hearing with the JSX's listing committee, which will make recommendations to JSX on its final decision.

Putu said 14 shares or 5.4 percent of the 254 listed shares on the JSX were rarely traded. "Only 20 percent -- in terms of capitalization -- of the shares listed on the JSX are traded actively each year," he said.

In comparison, Kuala Lumpur had 60 percent of its listed shares actively traded, Hong Kong 51 percent and Singapore 30 percent, he said.

He said that total funds mobilized on the JSX until the beginning of March were recorded at Rp 63.4 trillion, including Rp 51.2 trillion in stocks and Rp 12.2 trillion in bonds, with market capitalization of Rp 233.8 trillion. For the last several months, daily transaction volume was about Rp 300 billion per day. (10)