Political Year of 2014: Decline of Initial Public Offerings (IPOs) in Indonesia
In the first half of 2014, 13 Indonesian companies conducted an initial public offering (IPO), including one relisting, on the Indonesia Stock Exchange (IDX). Total proceeds that were raised in the IPOs by these 13 companies was IDR 4.05 trillion (USD $340.3 million). However, both results were weaker than those in the same period last year. In the first half of 2013, 17 new listings were registered on the IDX and which managed to raise a combined total of IDR 10 trillion (USD $840.3 million). Why do we see less IPOs in Indonesia in 2014?
The reason is that domestic players prefer to wait and see for results of the 2014 elections (both the legislative election which was held on 9 April 2014 and the presidential election which is scheduled for 9 July 2014). Indonesia is still a young democracy and therefore it is not 100 percent certain that an election will pass without problems. If an election would result in disorder then it will have a serious impact on the stock market and this is what makes businesses hesitant to conduct an IPO in a political year. Moreover, business players prefer to wait for a new government to unfold its plans for the economy as well as new policy strategies.
As such, it is expected that there will be more enthusiasm for IPOs after the result of the presidential election. However, another factor that increases political uncertainties is that the upcoming presidential election has become a close race between Joko Widodo and Prabowo Subianto. Most recent polls still put Widodo in the lead but Subianto is closing the gap rapidly. Therefore the market cannot act based on prediction or feeling. Previously, the market showed that it supports Widodo (evidenced by a sharply rising stock market on the day of his candidacy).
But despite reduced enthusiasm to hold an IPO, the Indonesia Stock Exchange still targets 30 new listings for this year. Director of the IDX Hoesen said that new listings are important to enhance the exchange’s market capitalization and increase stock trading. Hoesen added that six companies will be listed on the IDX soon. These are Magna Finance, Bank Dinar, Bank Agris, Sitara Propertindo, Mitrabara Adiperdana and Batavia Prosperindo Internasional. In the first half of 2014, the following companies held an IPO:
Last Update: 29 Mar 2021
IPOs on the Indonesia Stock Exchange in First Half 2014
| Company | P: 29 Mar 2021 | P: 28 Mar 2021 | Gain/Loss | P/E ttm | Yield % | Gain/Loss YTD |
| Bank Panin SyariahPNBS | 83 | 82 | 1.22% | N/A | 0.00% | -4.60% |
| Asuransi Mitra Maparya Tbk.ASMI | 925 | 930 | -0.54% | N/A | 0.00% | -6.57% |
| Bank Ina Perdana Tbk.BINA | 1,560 | 1,550 | 0.65% | N/A | 0.00% | 64.21% |
| Capitol Nusantara Indonesia Tbk.CANI | 186 | 186 | 0.00% | N/A | 0.00% | 22.37% |
| Tunas Alfin Tbk.TALF | 310 | 258 | 20.16% | N/A | 0.00% | 13.97% |
| Bali Towerindo Sentra Tbk.BALI | 700 | 690 | 1.45% | N/A | 0.00% | -6.04% |
| Wijaya Karya BetonWTON | 334 | 344 | -2.91% | N/A | 0.00% | -20.85% |
| Graha Layar PrimaBLTZ | 4,600 | 4,650 | -1.08% | N/A | 0.00% | 53.85% |
| Intermedia Capital Tbk.MDIA | 63 | 66 | -4.55% | N/A | 0.00% | 3.28% |
| Eka Sari Lorena TransportLRNA | 180 | 185 | -2.70% | N/A | 0.00% | 1.69% |
| Link NetLINK | 3,240 | 3,200 | 1.25% | N/A | 0.00% | 25.10% |
| Chitose InternasionalCINT | 238 | 244 | -2.46% | N/A | 0.00% | -6.30% |
| Combined Total | 12,419 | 12,385 | 0.27% | 28.16% |
Green colour indicates upward movement
Red colour indicates downward movement
P = price; E = earnings; D = dividend; Yield = D/P
"N/A" indicates P/E < 0 (negative earnings)
"-" indicates E,D,P or YTD is not available
General Director of the IDX, Ito Warsito, said that a stable Indonesian rupiah exchange rate is important for the attractiveness of Indonesian stocks. Since May 2013, the rupiah has depreciated significantly against the US dollar due to the looming end of the Federal Reserve’s quantitative easing program in combination with Indonesia’s wide current account deficit. Although the influence of the winding down of QE3 has waned, the current account deficit is still a concern and puts pressure on the rupiah rate. In the first quarter of 2014, the country’s current account deficit was 2.06 of gross domestic product (GDP). Recently the Governor of Bank Indonesia, Agus Martowardojo, stated that this deficit will probably widen in the second quarter.
Indonesia Current Account Balance:
Manhattan-based Morgan Stanley stated in a report titled “Indonesia Economics and Strategy - the Election Square-Off”, released on 26 June 2014, that it is less concerned about the result of the presidential election but instead says that market players should pay closer attention to the actual implementation of reforms after a new government is inaugurated in October 2014. Morgan Stanley is confident about Indonesia’s strong democratic fabric and about the low likelihood of significant economic changes after the election. The global financial services company said that “market reaction to the political outcome could be exaggerated,” as “based on investor feedback, it appears that the market could undershoot its fundamentals with a Prabowo Subianto victory and overshoot its fundamentals with a Joko Widodo (Jokowi) victory.”
Bahas
Silakan login atau berlangganan untuk mengomentari kolom ini