BCA's debut fails to boost sentiment on capital market

JAKARTA (JP): Bank Central Asia's much waited stock market debut on Wednesday failed to boost the bearish sentiment on the local exchange as lingering uncertainty over the political and social situations continued.

BCA shares quickly gained Rp 25 to reach Rp 1,425 right after the market opened and increased Rp 25 further to momentarily touch Rp 1,450.

But the bank's share price failed to reach higher ground and instead dropped in late trading to the end the day at its initial price of Rp 1,400.

As many as 169 million shares changed hands in the regular trading board.

The BCA listing, the first capital market debut made by the Indonesian Bank Restructuring Agency (IBRA), was earlier expected to boost market sentiment, which has been under pressure for weeks due to uncertainty over the country's political and social climate.

IBRA, which controls over Rp 600 trillion in assets taken over from owners of nationalized and closed down banks, initially hoped the BCA listing would serve as the benchmark for its future public offering plan.

"The market sentiment is currently negative. The BCA listing happened at the wrong time," Goei Siauw Hong of PT Nomura Indonesia said.

He hinted that the banking stocks were not going anywhere yet as the domestic banking sector was still in shaky.

Equity analyst Martin Panggabean said, however, that BCA shares were good for long-term investment. He acknowledged that the market's response to the BCA shares was not as good as expected, but he said such a response did not mean that BCA shares were bad.

"The BCA share price will decrease only in the short term," he said, adding that the listing was not timely.

According to Martin, the BCA listing was made at a time when the government was going to increase interest rates and when banking stocks were going down worldwide.

Hong said BCA shares would start to be tested by the market on Friday, after a market holiday on Thursday.

"The first day of trading on JSX usually does not reflect how the market will treat a company's shares. We will see on Friday about BCA shares," he said.

Statistically on JSX, parties related to the listing company usually intervene on the first day of trading to give the impression that the initial public offering (IPO) is a success, according to Hong.

"With BCA's first day of trading, we also felt there was some support in the market which defended the bank's share price to stop it decreasing past the Rp 1,400 initial price," he said.

An analyst at a local securities company confirmed there was intervention to support BCA's share price in trading on Wednesday.

"As much as Rp 140 billion in 'buying' transactions was done by major state-owned securities companies, and some Rp 25 billion by smaller securities companies," the analyst said.

However, IBRA's deputy chairman Jerry Eng said the government did not have the resources to intervene in the equity market to boost BCA shares.

"BCA's initial share price was appropriately set to reflect current conditions," he said during a media briefing on Wednesday morning.

BCA listed its shares on Wednesday after it offered 662.24 million shares or 22.5 percent of its total equity in its initial public offering between May 19 and May 23. IBRA said the BCA public offering was oversubscribed 1.2 times.

IBRA, which took over BCA in May 1998 from the Salim Group after a massive run on the bank, owned 93 percent of the bank before the IPO.

Listed on the same day on the JSX was securities company PT Panin Sekuritas, which sold its initial shares at Rp 550 and ended closing at Rp 700 on Wednesday, with 49 million shares traded.

Hong said the shares of Panin Sekuritas only circulated within the hands of a certain party, suspecting that the shares were being cornered.

"They are keeping the company shares to themselves for the time being and then could sell them on the market for a gain when the price is made high by them," he said.

"It is so difficult, if not impossible, for investors to buy Panin Sekuritas shares," he added.

Hong said other small companies who practiced similar actions recently were PT Asiaplast and PT Kridaperdana Indahgraha.

"The IPOs of these small companies of course cannot be used as a measure of market performance," Hong added. (udi)