Indonesia ends JPMorgan partnerships after US bank downgrades economy: Report

The headquarters of JP Morgan Chase on Park Avenue in New York.
The headquarters of JP Morgan Chase on Park Avenue in New York. PHOTO: AFP

JAKARTA (BLOOMBERG) - Indonesia's government terminated all business partnerships with JPMorgan Chase & Co after the US bank downgraded its assessment of South-east Asia's largest economy following Mr Donald Trump's surprise US election win, according to a report on the Okezone news portal.

The finance ministry ended the partnerships from Jan 1, saying the bank's November research report downgrading Indonesia to underweight was potentially destabilising to the nation's financial system, Okezone reported, citing a letter from Marwanto Harjowiryono, director general of treasury at the ministry.

JPMorgan downgraded Indonesia by two notches to underweight from overweight in a Nov 13 report as a "tactical response" to the Trump election win. The bank also downgraded Brazil to neutral from overweight, while noting that both countries may provide a "better buying opportunity" later.

JPMorgan's business in Indonesia continues to operate as normal, the bank said in an e-mailed statement on Tuesday (Jan 3).

"The impact on our clients is minimal and we continue to work with the Ministry of Finance to resolve the matter," it said.

Suahasil Nazara, head of fiscal agency at Indonesia's finance ministry, did not immediately respond to calls to his mobile phone on Tuesday.

Foreign investors sold a net US$2.8 billion (S$4.05 billion) of Indonesian stocks and bonds last quarter as investors dumped emerging-market assets following Mr Trump's victory. That drove the rupiah lower, forcing policy makers to intervene to stabilise the currency.