Many stock brokerage firms suffer losses
JAKARTA (JP): Nearly half of the brokerage houses on the Jakarta Stock Exchange reported significant losses in the first half of this year as the crisis bit deeper into their dwindling fee-based earnings.
Data from JSX management shows that of a total 174 securities houses in the local exchange, 75 posted substantial losses. The number of the losing brokerage houses increased significantly from 37 in the same period last year.
The data did not reveal the amount of the loss but it indicates that of the 75 securities houses, seven recorded losses of over Rp 5 billion, 19 suffered between Rp 1 billion to Rp 5 billion and the remaining 49 securities houses recorded losses below Rp 1 billion.
The other 99 brokerage firms managed to book profits in the first half of this year, compared to 147 in the same period last year.
A total of 184 brokerage firms submitted their financial statement to the JSX management in the first half of 1997, compared to 174 in the first six-month this year.
The decline in the number of brokerage houses was caused by the suspension of operations of some securities on the local exchange due to the monetary crisis.
Deutsche Morgan Grenfell Securities, Schroders Securities have ceased their operations in the local market since early this year.
Some of the companies operate only as a brokerage house while others also provide investment advise and underwriting services.
JSX director Mas Achmad Daniri said on Friday that companies that posted losses in the first-six month of this year were those which generated most of their revenues from the brokerage fee.
"I think companies depending only on the brokerage fee record losses," he said.
Average daily trading transactions in the local battered financial market declined sharply to around Rp 200 billion (US$17.39 million) compared to Rp 500 billion before the crisis hit the country in July last year.
The current market regulation stipulates that securities houses are entitled to a 0.3 percent commission fee from buying orders and a 0.4 percent fee from selling orders fee from investors.
"As the transaction value declines, the commission fee for brokerage houses also declines," Daniri said.
Indonesia's economic downturn, which has seen the rupiah plunge to almost 80 percent against the dollar, to hover around 11,600 now compared to its precrisis level of 2,450, has forced most local brokerage houses to feel the pinch of the crisis due to a drastic decline in trading transactions.
Daniri noted that securities houses which managed to make a profit this year were those that also provided investment advice and underwriting services to their customers. (aly)