Increased Foreign Investment in Indonesia's Stock Market in Quarter 1 - 2013
Foreign investment in Indonesia has maintained its steady pace in the first quarter of 2013. Ahead of next year's presidential and legislative elections, which trigger uncertainties about the future course of the country, foreigners have bought more Indonesian stocks in Q1-2013 than in the four quarters of 2012 combined. Moreover, foreign direct investments (FDIs) have increased by 27 percent (YoY) in Q1-2013 and show an interesting shift towards Indonesia's manufacturing sector.
The increasing inflow of foreign (direct) investment in Indonesia confirms foreign confidence in the country's economy. Amid ongoing global economic uncertainty investors are looking for investment opportunities that are relatively stable and secure. Indonesia is one of such places as this emerging country still has ample room for growth and is not too dependent on international conditions. Of course, weak global demand has reduced profitability for Indonesian companies engaged in the nation's commodity industries but strong and continued domestic consumption has been the main pillar of annual economic growth of over six percent in recent years. Considering that Indonesia's large population is expanding in terms of per capita GDP (and - not unimportantly - contains much room for expansion as a significant part of the population constitutes the lower middle class segment), this pillar will remain a reliable factor in the foreseeable future. Indonesian companies of which the core business is focused on the people's consumptive behavior (or industries closely related to it) have experienced remarkable growth in recent years, such as food and drinks, automotive, banking, real estate, or cement. These industries are closely connected as the purchase of a car is often realized through a bank loan, or, cement is needed to build a house, which is purchased by an end-user through a mortgage from a bank.
With this increased foreign investment in mind, Indonesian companies are now more willing to conduct an initial public offering (IPO) on the Indonesia Stock Exchange (IDX) to raise funds for business expansion. In this field there is also still much room for growth. Currently, less than 500 companies are listed on the Indonesia Stock Exchange, whereas the New York Stock Exchange has over 2,000 listed companies.
In Q1-2013, seven Indonesian companies conducted an IPO on the Indonesia Stock Exchange and reaped a combined IDR 2.15 trillion (USD $221.6 million) in funds, while for the remainder of this year 21 companies are planning to conduct one.
Planned IPOs in 2013
| Company | Sector |
| Bank Mestika |
Banking |
| Semen Baturaja |
Cement |
| Saratoga Investama Sedaya |
Equity |
| Acset Indonusa |
Construction |
| Electronic City Indonesia | Electronics |
| Austindo Nusantara Jaya | Food/Energy |
| Mitra Pinastika Mustika | Automotive |
| Dharma Satya Nusantara | Palm Oil/Wood |
| Nusa Raya Cipta | Infrastructure |
| Multipolar Technology | Information Technology |
| Bank National Nobu | Banking |
| Siloam Hospitals Group | Healthcare |
| Eka Sari Lorena | Transport |
| Bank Muamalat Indonesia | Banking |
| Bank Mitraniaga | Banking |
| Sriboga Ratu Raya | Wheat Flour |
| Wika Beton | Concrete |
| Delta Mas | Wheels |
| Dutapalma Nusantara | Palm Plantation |
| Garuda Maintenance Facility AeroAsia | Aviation |
| Air Asia | Aviation |
Source: Investor Daily
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