JSX expects 30 new IPOs next year<\/p>\n
JAKARTA (JP): The Jakarta Stock Exchange (JSX) is expecting 30
\nnew listings next year up from 21 this year, as more companies
\nlaunch initial public offerings (IPO) to capitalize on a
\nrecovering stock market.<\/p>\n
Of the 30 companies to float their shares, JSX expects 20
\nsmall to midsize companies, and 10 large companies.<\/p>\n
The exchange did not estimate the amount of capital that might
\nbe raised through the IPOs.<\/p>\n
But JSX president Mas Achmad Daniri expressed confidence that
\nthe stock market would rebound next year, after having lost some
\n70 percent of its value this year.<\/p>\n
He said that the daily average transaction value would reach
\nRp 650 billion (about US$64.84 million) up from Rp 550 billion
\nthis year.<\/p>\n
Asked about the assumption behind JSX targets, Daniri answered
\nthat it was the return of foreign stock investors.<\/p>\n
\"We hope that they (foreign investors) will return, when the
\ngovernment privatizes some of its assets under IBRA (the
\nIndonesian Bank Restructuring Agency) through the stock market,\"
\nDaniri told The Jakarta Post.<\/p>\n
Aside from improving Indonesia's overall investment climate,
\nthe divestment of state enterprises in the stock market would act
\nas a sweetener to lure in foreign investment, he said.<\/p>\n
Foreign investors made up only 20 percent of this year's total
\ntransactions value, down from 35 percent last year.<\/p>\n
The drop in foreign investors is widely seen as the main
\nreason of JSX's hefty decline.<\/p>\n
Its composite index fell from a peak of 700 points in January
\nto an average of 400 points near the end of the year.<\/p>\n
Daniri said the return of foreign investors would boost JSX's
\nperformance, since local investors consisted mostly of retail
\nclients.<\/p>\n
But he declined to estimate how the proportions between
\nforeign and local investors might look next year.<\/p>\n
There was no ideal proportion, he said, adding: \"We're in a
\ntransition period, where local investors are becoming stronger.\"<\/p>\n
But the recent change of Morgan Stanley Capital
\nInternational's (MSCI) index rating method might discourage
\nforeign stock investors to return to Indonesia.<\/p>\n
MSCI said it would adopt a free float rating method that would
\nrate stock market indexes by the percentage of shares available
\nfor transaction in the stock market. The shares controlled by the
\npublic companies' founders are not considered to be liquid.<\/p>\n
Indonesia's rate of free floating shares is known to be low,
\n30 percent to 40 percent on average. Founders or the government
\nown the majority interests in most publicly listed companies.<\/p>\n
Analysts have warned that Indonesia would become even less
\nattractive to foreign investors because of its low free float
\nrate.<\/p>\n
MSCI plans to apply the new method for its widely followed
\nindex rating next year.<\/p>\n
Daniri said that JSX and the Capital Market Supervisory Agency
\n(Bapepam) would meet MSCI to have a better understanding of its
\nnew rating method.<\/p>\n
But he added that this was the right timing for the government
\nto unload its assets under IBRA in the stock market.<\/p>\n
He also said that MSCI wanted to encourage companies listed on
\nstock markets to improvement their corporate governance.<\/p>\n
By diversifying the ownership to the public, the need for more
\nprudent management will rise, Daniri said. (bkm)<\/p>",
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