Indonesia tries to assure banks they won't be penalized if research is 'credible'

Wed Jan 4, 2017 6:27am EST
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By Hidayat Setiaji and Eveline Danubrata

JAKARTA (Reuters) - Indonesia's finance ministry sought on Wednesday to assure banks and research firms that they will not be sanctioned for their assessment of the country as long as it is "credible".

Indonesia cut its business ties with JPMorgan Chase & Co (JPM.N: Quote) because its research was "not credible and not objective", Suahasil Nazara, head of the Ministry of Finance's fiscal policy office, told reporters.

Some analysts have said that the decision has raised concern about whether the government would penalize other research providers for reports that are deemed to be negative.

Nazara dismissed such worries.

"There is no need to be afraid as long as it's credible," he said.

"The point is, don't worry, go ahead with an analysis of Indonesia's economy that is as credible as possible, by using the available data and facts."

In a note dated Nov. 13, JPMorgan analysts downgraded their investment recommendation on Indonesia stocks to "underweight" from "overweight", citing higher risk premiums for emerging markets after Donald Trump won the U.S. presidential election.

Indonesia has dropped JPMorgan's services as a primary dealer for domestic sovereign bonds and as an underwriter for bonds sold to the global markets, Nazara said.   Continued...

A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015.  REUTERS/Mike Segar/Files