Indonesia sanctions JPMorgan for negative research note

JPMorgan moved to "underweight" from "overweight" on Indonesian government bonds.
JPMorgan moved to "underweight" from "overweight" on Indonesian government bonds.PHOTO: AFP

JAKARTA (REUTERS) - Indonesia said on Thursday (Aug 27) it had "sanctioned" JPMorgan Chase & Co after the investment bank recommended smaller exposure to government bonds of South-east Asia's biggest economy, but did not say what the sanctions entailed.

Investor sentiment toward Indonesia has turned increasingly negative due to its fragile economy, with slowing domestic consumption, declining forex reserves, and rock-bottom commodity prices.

JPMorgan moved to "underweight" from "overweight" on Indonesian government bonds in a report dated Aug 20. Some of the reasons it cited were China's devaluation of its currency and Indonesia's planned increase in government borrowings.

The report drew a sharp reaction from Finance Minister Bambang Brodjonegoro and central bank governor Agus Martowardojo. The Bank Indonesia chief had accused JPMorgan on Wednesday of spreading panic in the country.

"When there is negative analysis about Indonesia, we as the authorities have to take action because no matter what, it is something that is also unethical, turning a country into a commodity," Brodjonegoro told reporters.

When asked repeatedly what the sanctions against JPMorgan were, the minister declined to elaborate, only saying they "will be disturbing for them and make them uncomfortable".

Mr Brodjonegoro later added jokingly that JPMorgan should do 100 push-ups as punishment. A JPMorgan spokesman declined to comment.

Indonesia is grappling with its weakest growth in six years and policymakers have stepped up efforts in the past two weeks to stem the sell-off in the currency and stock markets.

Some analysts have overlooked the "micro data" and equated emerging economies without taking into account the fundamental differences, Mr Brodjonegoro said.