JSX may not reach target for new issuers<\/p>\n
JAKARTA (JP): Executives of several securities companies have
\nestimated that the Jakarta Stock Exchange's (JSX) expectation of
\n30 to 35 new share issuers this year will not be met due to a
\nconcentration on large-sized issues.<\/p>\n
A director of PT Asian Development Securities, Ikeda, noticed
\nthat the government's announcement on the planned flotation of
\nthree state-owned companies this year has induced investors'
\nconcentration away from smaller firms planning to go public.<\/p>\n
Minister of Finance Mari'e Muhammad said in a hearing with the
\nHouse of Representatives last week that three state-owned
\ncompanies -- PT Jasa Marga, PT Krakatau Steel and PT Bank Negara
\nIndonesia -- will go public this year.<\/p>\n
"Following the announcement, investors must have been busy
\ntrying to anticipate the timing of the offerings," he said.<\/p>\n
In addition to investors' concentration, according to Ikeda,
\nother private issuers, which are generally smaller and less
\nattractive, are now waiting for the fixed schedules of the three
\nstate companies' initial offering.<\/p>\n
Ikeda told The Jakarta Post that such fixed schedules would be
\nhelpful to bring other companies to the market earlier this year.<\/p>\n
"They need to know the time when the market is able to absorb
\ntheir offerings," he said.<\/p>\n
He cited an example that concentration on PT Telkom's initial
\noffering last year resulted in the negative performance of most
\nnew issuers, including another state-owned company, PT Tambang
\nTimah.<\/p>\n
Last year, seven companies -- Tambang Timah, PT Miwon, PT
\nSuryamas Dutamakmur, PT BDNI Reksadana, PT Elang Realty, PT
\nKomatsu Indonesia and PT Bhuwanatala Indah Permai -- went public
\nin October, just a few weeks before Telkom's offering.<\/p>\n
Miwon even failed in the primary market and caused its
\nunderwriter, who had to pay for unsold shares, cash problems.<\/p>\n
Ikeda said that the share prices of those companies dropped
\nbelow their initial offering price due to market weakness as
\ninvestors were preparing themselves to buy Telkom shares.<\/p>\n
The JSX's president, Hasan Zein Mahmud, said recently that "it
\nwas a pity that new issuers did not take advantage of the bullish
\nsentiment earlier this year".<\/p>\n
"Unlike last year, when some new companies were listed in
\nJanuary, the JSX will not see any new issuers until the end of
\nMarch," a director of PT Sigma Batara, Ignasius Yonan told the
\nPost.<\/p>\n
Ignasius said that it is a misleading perception to think that
\nthe market's sentiment has been bullish or to assume that it is
\nthe right time for new listings.<\/p>\n
On the contrary, he noted that current market sentiment is
\nanother reason for new issuers' hesitation.<\/p>\n
"Although the JSX composite index moved up by 82 points to 595
\npoints last week, it was not a sign of a bullish market," he
\ncontended.<\/p>\n
The JSX composite index closed at 513.8 points on Dec. 28,
\n1995.<\/p>\n
He added that the market was actually driven by not more than
\n10 percent of the 238 counters on the exchange.<\/p>\n
In January, the top 20 companies in terms of trading volume
\nand value accounted for 59.5 percent and 68.6 percent of the
\ntotal transactions respectively.<\/p>\n
The figure indicated that transactions on the exchange were
\ndominated by a relatively small number of listed companies.<\/p>\n
He noted that the domination of big cap stocks has not only
\nlifted JSX share prices by 16 percent but also given a signal of
\nnegative sentiment on small and medium size companies.<\/p>\n
Ignasius came to the conclusion that it would not be easy for
\nsmall and medium size issuers, with a market capitalization of
\nless than Rp 500 billion (US$21.5 million), to gain the market's
\nattention now.<\/p>\n
He also predicted that none of the three state-owned companies
\nwill go public in the first half of this year.<\/p>\n
"Therefore, the government has to arrange the offering
\nschedules carefully to avoid market destabilization," he added.
\n(08)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/jsx-may-not-reach-target-for-new-issuers-1447893297",
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