JSX forecasts 30 IPOs next year

JSX forecasts 30 IPOs next year

Rendi A. Witular, Jakarta

The Jakarta Stock Exchange (JSX) management estimates that 30 companies will sell their shares to the public next year by initial public offering (IPO) and become listed on the bourse.

JSX president director Erry Firmansyah said the projection assumed that the economic growth rate would reach between 5 percent and 6 percent next year, up from the estimated 4 percent to 5 percent for this year.

"The economy will be relatively better next year. That is why we expect more companies to go for an IPO to seek financing," Erry said on Thursday after an extraordinary shareholders meeting.

As for this year, he was still optimistic that 20 firms would list their shares on the bourse.

The JSX also estimates that 45 publicly listed companies will launch a rights issue to raise cash, and issue bonus shares as well.

Erry said that during the meeting, shareholders agreed to set up several economic indicators as a guideline for next year's business plan.

The inflation rate is projected at between 5 percent and 7 percent next year, Bank Indonesia's benchmark interest rate at 6 percent and the U.S. Federal Reserve key interest rate at between 1 percent and 2 percent.

The JSX has made a modest estimation that daily stock transactions will reach an average Rp 750 billion (US$83 million) in 2005, unchanged from this year because of a possible fluctuation in trading.

According to indicators, the JSX expects operational revenue of Rp 100 billion, up from the Rp 78.1 billion estimated for this year. The bourse's pre-tax profit is projected at Rp 7.13 billion, lower than this year's target of Rp 18.9 billion upon higher investment spending.

The JSX plans to spend Rp 48.5 billion in investment next year, up by 223 percent from this year.

The huge investment aims to enhance the bourse's trading infrastructure, provide new facilities to support the launch of a new product called American Warrant and to develop remote trading facilities.

Erry said the JSX would also provide facilities for bond trading, like those available on the Surabaya Stock Exchange (SSX), in anticipation of next year's capital market demutualization policy. One of the requirements of the policy is to combine the JSX and SSX.

At present, the SSX holds a license to facilitate bond trading, while the JSX manages stock trading.

The government plans to demutualize the country's capital market next year, in an effort to smooth the decision-making process between the two bourses' managements, to revitalize the internal divisions of the bourses and to boost communication with investors and listed companies.

Demutualization is the transferal of the JSX's control to individuals or institutions which no direct relations with activity in the bourse.

The current shareholders of the JSX are securities firms.