IPO plan creates active buying in bank shares<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Heavy buying on banking shares helped the Jakarta Composite Index
\nup on Wednesday, with traders attributing the sentiment to the
\ngovernment's plans to sell a 15 percent stake in Bank Mandiri --
\nthe country's largest bank.<\/p>\n
The index ended up 0.4 percent higher, or 2.107 points, at
\n504.53, compared with the previous day's closing, with the total
\nvolume of 1.27 billion shares worth Rp 540 billion.<\/p>\n
Over the past several months, the stock market sentiment has
\nbeen positive with bargain-hunters seeking attractive local
\nshares, still considered undervalued.<\/p>\n
\"Aside from Gudang Garam and Astra shares, gains in many banks
\nhave also helped the movement of today's index,\" a stock trader
\nat a local securities company said, referring to the largest
\ncigarette maker and auto giant PT Astra International.<\/p>\n
\"Investors have been eying banking shares since Mandiri's IPO
\nplan became obvious last week,\" he added, referring to the bank's
\ninitial public offering plan, in which around 2 billion shares
\nwill be on offer.<\/p>\n
Mandiri has total assets of around Rp 250 trillion (around
\nUS$30 billion).<\/p>\n
\"That has further buoyed the market sentiment, already
\npositive due to the strong showing of the rupiah.\"<\/p>\n
The market is betting that there would be a strong demand on
\nthe IPO, and investors who fail to buy the shares during the
\noffering period would go to the secondary when the shares are
\nlisted next month, a move that would push up the price of the
\nshares and may also raise the prices of shares in other listed
\nbanks.<\/p>\n
Since early this year, the local unit has appreciated close to
\n10 percent to the U.S. dollar, taking advantage of the
\ngreenback's recent shaky performance and the country's stable
\nmacroeconomic condition.<\/p>\n
Out of the 23 banks listed on the Jakarta Stock Exchange,
\neight banks saw the prices of their shares rising, with Bank
\nNegara Indonesia (BNI) enjoying the highest gains of 17 percent.<\/p>\n
BNI rose by Rp 25 to close at Rp 170.<\/p>\n
Bank Central Asia (BCA), the country's largest private bank,
\nalso closed higher at Rp 2,725, 0.9 percent up from Tuesday. So
\ndid Bank Danamon and Bank Niaga, ending up higher to close at Rp
\n1,300 and Rp 45, respectively.<\/p>\n
Asked whether the upward trend in the banking shares would
\ncontinue, another trader said she was not so sure, saying that
\nthere would be a point where everything would all come down to
\nthe fundamentals.<\/p>\n
\"Fundamentally speaking, the banking sector in the country is
\nyet to fully recover as credits to private sector, despite
\nrising, haven't reached a level that can drive the economy. I
\nthink this trend will be short-lived,\" she said.<\/p>\n
She was quick to add however, that the Mandiri's IPO plan
\nwould form a significant part of efforts to instill confidence in
\nthe banking sector. Being a publicly listed company would force
\nthe management to take prudential and transparent steps in
\nmanaging the bank.<\/p>",
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"sponsor": "Okusi Associates",
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