Several illiquid firms may be delisted from JSX

JAKARTA (JP): Several publicly-listed companies whose shares are rarely traded might be delisted form the Jakarta Stock Exchange soon, an executive said over the weekend.

The chairman of the Association of Indonesian Issuers, Rosano Barrack, said the delisting measure was in line with stock exchange regulations.

"But I don't know exactly which shares. If I know I'll buy them," he said in a panel discussion on improving capital market liquidity in Surabaya.

"We have to be prepared on this action," he said.

He said delisting was the regulator's last resort.

The Capital Market Supervisory Agency Chairman, I Putu Gede Ary Suta, said delisting was one of many sanctions to encourage share issuers' to improve liquidity.

He said issuers and underwriters should do something to ensure their shares were traded in order to avoid being delisted.

"The illiquid shares not only harm the issuers but also the capital market as a whole," he said.

He said 14 shares or 5.4 percent of all the 258 listed shares on the JSX were rarely traded.

Putu also warned listed companies that hostile takeovers were a possibility if share liquidity was not maintained.

"If a listed company has a good performance but its shares are not liquid on the market then they could be undervalued. This can invite a hostile takeover," he said.

But Putu said there were no clear criteria for share liquidity.

"We have no regulation yet on the liquidity. But the Capital Market Supervisory Agency has the right to regulate it," he was quoted by Antara as saying.

Mas Achmad Daniri, a director of the Jakarta Stock Exchange, said although there were no criteria on share liquidity, there were stipulation for delisting.

They include the condition of issuers experiencing three consecutive years in red or not paying cash dividends, or those whose shares are not traded for six consecutive months, and those who manipulate financial statements.

Putu said only 20 percent of Indonesia's exchanges capitalization shares were traded each year.

In Hong Kong the figure is 51 percent, in Singapore 30 percent and Malaysia 60 percent.

The development of mutual funds was encouraging and should be promoted to help local retailers, he said.

He said only 42 percent of the markets' investors were Indonesian.

Indonesia had 30 mutual funds and another 15 were waiting for his agency's approval. (bnt)