Underwriters to 'cooperate' on share prices

Underwriters to 'cooperate' on share prices

JAKARTA (JP): The Association of Indonesian Securities Underwriters agreed yesterday to "cooperate" in maintaining stock prices above their Initial Price Offering (IPO) levels.

"We are ready to cooperate to keep prices above the levels set during the primary offering period," L.G. Rompas, the chairman of the association, said following a meeting with the chairman of the Capital Market Supervisory Agency (Bapepam), Bacelius Ruru.

Rompas and several other members of the association met Ruru to explain the association's working agenda and the association's capital market responsibilities.

The Bapepam chairman sent letters to nine securities companies last week asking them about their commitment to preventing the prices of the stocks which they manage from falling far below IPO levels.

Prices of several stocks underwritten by the nine securities companies -- PT Sigma Batara, PT W.I. Carr Indonesia, PT Pentasena Arthasentosa, PT Standard Chartered, PT OCBC Sikap Securities, PT Pregrine Sewu Securities, PT Danareksa Securities, PT Nomura Indonesia and PT Gadjah Tunggal DBS Securities -- have dropped by 25 percent from their IPO price levels.

Rompas said that the association would appeal to its members to set share prices at realistic levels to prevent them from falling on the secondary market.

"It is the only realistic thing for us to do," he said.

Rompas said that the association would also cooperate by setting the timing for the floating of stocks on the market with a view to avoiding oversupply.

However, he ruled out any form of direct intervention to control stock prices.

"Buying back shares in order to prop up their price is illegal, since it is a form of price manipulation," he said, adding that the sluggish condition of stock prices on the local market over the past two weeks was not due to poor fundamental factors of the companies concerned. Rather, he said, the low prices were due to the poor condition of stock trading on the global market. (hen)