Nothing rings in the new year like wrenching yourself from a wine-flecked holiday stupor and slogging through the morning commute only to find that you've become embroiled in a beef with the nation of Indonesia.
For Adrian Mowat, JPMorgan's chief Asian markets strategist, that's just another Tuesday. On America's first business day of the year, Indonesia's government announced it would cut some ties with the bank in response to a downbeat call from Mowat and his team on Indonesian equities following the election of Donald Trump. Reuters has the story:
Indonesia will no longer use JPMorgan as a primary bond dealer and has also revoked a special designation that allows it to perform certain banking services, Suahasil Nazara, head of the Ministry of Finance's fiscal policy office, told Reuters on Tuesday.
It is the second time recently that JPMorgan's research arm has drawn ire from the Indonesian government, and highlights the inevitable conflicts banks face when their analysts express a negative view on a country or company that their investment bankers are trying to court.
The Indonesian government said that it's not that they're personally offended, per se, just that they had a rep to maintain. “We don’t close ourselves to assessment because it’s important for us to improve ourselves,” Finance Minister Sri Mulyani said, according to the Wall Street Journal. “But the institutions with big names have very high responsibility in creating positive psychology instead of doing [something] misleading.”
Nazara elaborated. “It's not that we think we're so great, but we look at ourselves and we look at other countries' economies” – particularly Brazil, which got a better rating from JPMorgan despite political turmoil. “Our mindset is, if you're doing business here in Indonesia, the spirit is to maintain stability. Don't create unnecessary volatility to create business,” Nazara said.
The move represents the second time JPMorgan has been sanctioned over analyst ratings in Indonesia. But the revocation of the bank's status as a so-called perception bank – what Indonesia calls firms it hires to conduct international finance – isn't expected to harm any JPMorgan clients, the bank said. But it will mean a temporary halt to JPMorgan's lucrative business arranging bond deals for the populous country.
Happy New Year, Mr. Mowat.