JSX to revise new delisting policy

JAKARTA (JP): The Jakarta Stock Exchange (JSX) said on Friday it would revise a new delisting policy it had earlier delayed introducing, because its untimely implementation would have threatened many public listed companies.

The JSX president Mas Achmad Daniri said the decision was made in consideration of the still fragile economic condition which would have pushed many publicly listed companies to face delisting.

"We're studying the situation in order to revise the delisting policy, but whether the new policy will actually be different, depends on our study," Daniri said during a press meeting.

The JSX last week announced the delay of 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 were traded at below Rp 50 (about 0.52 US cents) a share for three consecutive months, that company would face delisting.

Other delisting criteria are those of 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.

Daniri said the principles behind the delisting policy were to establish reasonable stock market prices, and promote the liquidity of the market.

"Whatever the new policy, it can never be far off from these two principles; otherwise we couldn't call ourselves a stock market," Daniri said.

Yet as the economy was still lagging, many companies' performance in the stock market remained low.

"The bank restructuring process has yet to show an impact, and share prices of many banks have been very low," he said.

The other reason why the JSX would need to revise its delisting policy, Daniri said, was that some companies' nominal share prices were already below Rp 50.

If shares of these companies, in particular banks, were traded at prices lower than Rp 50 but higher than their nominal prices, the JSX could not fault them for under-performing.

According to the Indonesian Securities Investor Society (MISSI), setting a floor price for shares could trap inexperienced investors.

MISSI said a company could deliberately keep its share price low for almost three months in order to make it liable for delisting. Investors would panic and dump the company's shares at any price.

The company would then purchase the shares at unreasonably low price levels, and later escape the delisting threat by spreading good news about its operations. As it could prop up its share prices, the company could sell its shares and make significant profits. (bkm)