Valuing BCA objectively

Valuing BCA objectively

The two recent articles by Melville S. Brown on BCA's initial public offering certainly made for amusing reading (The Jakarta Post, May 29, 2000 and May 30, 2000). Although he raises some interesting points, it is obvious from the tone of his writing that he seems to bear some grudge against PT Danareksa and the Indonesian Bank Restructuring Agency.

In his articles he suggests that Danareksa's research is biased and a "work of fiction". Yet he himself is hardly objective in his analysis and rather embarrassingly reveals himself as being totally incompetent. Most incredible of all is his assertion that the BCA IPO price of Rp 1,400 can in some way be compared to the average trading price of publicly listed banks on the Jakarta Stock Exchange. Using this absurd logic would mean that we sell "expensive" shares like Unilever Indonesia and buy "cheap" shares like Bank Danamon. He basically forgets that share prices also reflect the number of shares in issuance -- something which a schoolchild should know -- let alone an "international banker" like himself.

MARTIN R JENKINS

Jakarta