Many stock brokerage firms suffer losses

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)