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