BRI to be added to MSCI Standard Indices

BRI to be added to MSCI Standard Indices

Dow Jones, Jakarta

Bank Rakyat Indonesia, the country's fourth largest bank by assets, will be added to the Morgan Stanley Capital International (MSCI) Standard indexes starting Nov. 21.

The move was made following the bank's successful initial public offering (IPO) earlier this month, MSCI said in a statement issued on Tuesday.

MSCI said the market capitalization of BRI stock available for investors was above a US$200 million threshold needed for inclusion in the indexes.

The inclusion of BRI to the MSCI list will boost sentiment toward the stock, as overseas funds often use MSCI indexes as a benchmark to make investment decisions.

Indeed, shares in BRI rose by Rp 25, or 2.6 percent at Rp 1,000 per share on the news despite the overall weak stock market sentiment.

BRI also shrugged off the weak market trend on Monday when it made its first stock market debut as the share price closed 11 percent higher at Rp 975. Investors had been heartened by the bank's strong fundamentals and earnings outlook.

The bank sold 4.76 billion shares, or 40.5 percent of its total shares through an IPO earlier this month. This was the country's largest IPO since the late 1990s financial crisis.

There was strong demand for the IPO as the shares were more than 13 times oversubscribed. This has allowed the government to price the IPO at the top range of the price target.

Foreign investors accounted for two-thirds of the IPO shares on growing interest in Indonesia's booming asset markets. Lower interest rates and a stable political environment have pushed up the stock market by almost 45 percent since the start of the year.

Bank Rakyat is now among the top 15 capitalized stocks on the Jakarta Stock Exchange, and the fourth largest in the banking sector after Bank Mandiri, Bank Negara Indonesia and Bank Central Asia.

Bank Rakyat lends mainly to farmers and small businesses, and has only a tiny portion of loans with corporations, analysts said.