Bank Mandiri makes impressive stock market debut

Bank Mandiri makes impressive stock market debut

Evi Mariani and Rendi Witular, The Jakarta Post, Jakarta

Shares of the giant state-owned Bank Mandiri made an impressive
debut on Monday, surging by 25.9 percent, which some say may
reflect growing investor confidence in the economy.

While most shares on the Jakarta Stock Exchange (JSX) suffered
losses after a bomb exploded at the House of Representatives in
the morning, foreign investors who failed to get enough of
Mandiri shares from the initial public offering (IPO) earlier in
the month rushed in, pushing the price up to Rp 850, or Rp 175
higher than IPO price of Rp 675, dealers said.

"There is still a huge potential for the Mandiri share price
to go up. I predict that within a one-year period, the shares can
reach Rp 1,175 or 1.4 times its book value," BNI Securities
banking analyst Fendi Susiyanto told The Jakarta Post.

Mandiri, the country's largest bank in terms of assets,
offered 20 percent of its stake in the country's largest IPO
since the 1997 financial crisis and the largest bank share
issuance in Asia, outside Japan. The IPO was more than seven
times oversubscribed, with foreign institutional investors taking
69 percent of the 4 billion shares on offer -- of which 30
percent came from Asia, 37 percent from Europe, and 33 percent
from North America. The Rp 2.7 trillion (about US$329 million)
proceeds raised from the IPO will help finance the 2003 state
budget deficit.

Mandiri is now the six largest counter in the Jakarta stock
exchange in terms of market capitalization, which means that
Mandiri can move the index up by 0.17 percent for every one point
climb in its share price. Indeed, the strong gains on Monday
helped the JSX index to close 2 percent higher at 534.96 despite
the bomb blast.

The IPO was launched at a time when confidence in the
country's economy has started to improve amid rising stability in
macroeconomic indicators, and as foreign investors were
aggressively seeking higher returns from local assets due to the
global weakening of the U.S. dollar.

Although the stellar performance of the Mandiri shares may
indicate rising foreign investor confidence in the country's
economy, the bomb blast on Monday could revive fears of political
uncertainty ahead of the 2004 general election and the war
against terrorism.

But the government is hopeful that the successful Mandiri IPO
could be repeated in the upcoming IPO of two other state-owned
firms this year: Bank BRI and gas distribution firm PGN.