Investors warned against Gallo Oil

The president of the Jakarta Stock Exchange (JSX), Mas Achmad Daniri, has warned the investing public to be careful in investing in a mining company, which has yet to start its production.

"Investors should be extra careful in investing in a start-up mining company," Daniri said in his comment on PT Bumi Modern's plan to acquire the entire stake of Gallo Oil, an oil company, which has oil interest in Yamen.

According to Daniri, investing in a start-up company is much riskier as, unlike most of companies listed on the local stock exchange, the new company like Gallo Oil has yet to start production.

Bumi Modern of the Bakrie Group plans to launch a massive rights issue to acquire Gallo Oil, which has oil interest in Yemen. The Capital Market Supervisory Agency (Bapepam) initially opposed the plan due to a lack of public disclosure in the part of Bumi Modern in explaining the prospect of the oil company.

The capital market watchdog finally approved the plan late on Friday but most securities analysts still doubted the prospects of the oil company, which is also controlled by the Bakrie related company.

Daniri said that the JSX had yet to accommodate such a start up company but he added that in the future such a kind of a company should has its place in the market to give more alternatives to investors.

He, however, said that the start-up companies should be traded in a different board so that investors would be able to differentiate them with those, which have proven track records. (*)