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Indonesia investors burned by US credit crisis


September 23, 2008

Indonesia investors burned by US credit crisis – Jakarta post
The collapse of US financial giant Lehman Brothers has not yet directly hit the Indonesian financial establishment, but several local high-income investors here have suffered hefty losses in their portfolios in overseas banks, reported the Jakarta Post.

Most affected investors, from the middle to upper-income bracket, were offered lucrative investment products by the banks' wealth management divisions under complicated contracts.

Citibank Indonesia corporate affair head Ditta Amahorseya declined to comment on the issue, but promised to explain the Lehman exposure Tuesday, the daily said.

"I think some banks that are exposed to Lehman do not want to disclose themselves," it quoted Nico Omer Jonckheere, Valbury Asia Futures vice president of research and analysis, as saying.

The Indonesian unit of UK-based Standard Chartered admitted there were several local investors whose investments had been exposed to Lehman assets. However, the bank refused to disclose whether they suffered any losses.

"I can assure you we are putting consumer protection as our top priority," said Lani Darmawan, Standard Chartered head of consumer banking.

Swiss-based UBS said its direct and counterparty exposures to Lehman would not exceed $300 million globally, because it had taken several measures to prevent possible backlash from other financial institutions, according to UBS Singapore spokesman Julie Yeo.

Danareksa Research Institute chief researcher Purbaya Yudhi Sadewa said some local investors were definitely suffering losses due to Lehman's bankruptcy, especially those receiving high returns.

"Well, it's high risk, high gain," Purbaya said.

He suggested investors to put their money in safer portfolios, such as government bonds, for instance, and carefully read the terms and conditions before deciding to invest in higher-risk products.

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