Indonesia considers curbs on negative research by banks

Indonesia has said it stopped using JPMorgan as a primary dealer & underwriter of sovereign bonds

Indonesia’s government is considering curbs on negative research reports by foreign banks, building on its decision to punish JPMorgan Chase & Co for issuing a bearish call on the country’s equity market.

The finance ministry may ask top management at global banks that hold primary dealerships in Indonesian sovereign bonds to sign pledges to refrain from issuing research that could destabilise local financial markets, according to Loto Srinaita Ginting, the ministry’s director of government securities.

The proposal was discussed with some primary bond dealers at a meeting in mid-December, according to a person familiar with the matter. It would require approval by Finance Minister Sri Mulyani Indrawati, another person said.

Indonesia this week said it stopped using JPMorgan as a primary dealer and underwriter of sovereign bonds, a retaliation for a November report downgrading the country’s equities to “underweight” from “overweight” following Donald Trump’s US election victory. Commenting on the decision to cut government ties with JPMorgan, Mulyani said Tuesday that banks should take responsibility for economic reports that “could influence fundamentals and psychology.”

Global banks that hold primary dealerships in Indonesian government bonds include Standard Chartered, HSBC Holdings, Deutsche Bank and Citigroup.