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Jakarta Post

IDX identifies 41 'pump-and-dump' stocks in bourse

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Mon, January 13, 2020   /   10:53 am
IDX identifies 41 'pump-and-dump' stocks in bourse Indonesia Stock Exchange (IDX) trading director Laksono Widodo (left), surveillance and compliance director Kristian S Manullang (second left), assessment director I Gede Nyoman Yetna and finance and human resources director Risa E Rustam pose for a picture at the IDX building in Jakarta on Friday. (Riska Rahman/Riska Rahman)

The Indonesia Stock Exchange (IDX) has identified 41 stocks whose prices are suspected of having been manipulated in so-called “pump-and-dump" schemes, a bourse official has said.

“Based on our market surveillance, we’ve identified 41 stocks with share price movements that don’t reflect their fundamentals and that were allegedly used for pump-and-dump practices,” IDX trading director Laksono Widodo said during a press briefing in Jakarta on Friday.

He declined to go into details on the presumption of innocence principle.

A pump-and-dump is an attempt to manipulate the price of a stock through recommendations based on false, misleading or greatly exaggerated statements. This scheme is usually conducted by parties who already have an established position in the stocks in order to sell their positions at a profit after the hype has boosted the stock price.

Laksono added that the stocks had a major contribution to the bourse’s transaction volume. However, given that the practice was usually associated with low-value stocks, the transactions only accounted for around 8.3 percent of the IDX average daily transaction value last year.

The bourse recorded average daily transactions of Rp 9.1 trillion (US$656.88 million) in 2019.

Pumping-and-dumping has been in the spotlight since President Joko “Jokowi” Widodo called on the stock market's stakeholders to “clean up” the capital market from manipulation in a bid to boost fundraising efforts.

“We must crack down on manipulation in the market and financial transactions, which have led to fraud and criminal activities […] Clean it up and stop them!” he said during his remarks on the opening of the first day of trading on the IDX on Jan. 2.

The call was made amid the Supreme Audit Agency (BPK) revelation that ailing state-owned insurer Asuransi Jiwasraya suffered losses from investing in low-quality stocks, some of which were widely believed to have been subject to pump-and-dump practices by market players.