JSX market cap down 72% this year

JAKARTA (JP): The Jakarta Stock Exchange (JSX) lost 72.5 percent of its market capitalization this year dropping to Rp 261.9 trillion (US$27.56 billion) from Rp 451.8 trillion at the end of 1999 as share prices tumbled amid a sluggish market.

JSX Composite Index as of Dec. 14, closed at 419.19, less than 60 percent of the level of 703.48 recorded at the start of trading in January last year, according to the exchange's end of year report issued on Friday.

Average transaction volumes this year also dropped to 570.3 million shares from 722.6 million shares in 1999. In the same period, the average transaction value fell to Rp 521.8 billion from Rp 598.7 billion last year.

However, funds raised through initial public offering grew by 88 percent to Rp 2.14 trillion. The number of new listings also increased to 21 companies as compared to only nine companies last year.

Among the biggest newcomers was PT Bank Central Asia (BCA), the first company under the Indonesian Bank Restructuring Agency (IBRA) that floated its shares on the local stock market.

BCA offered 662.24 million shares at a price of Rp 1,400 a share, or 22.5 percent of its total equity in its initial public offering in June.

The total value of shares floated on the JSX during this year reached a total of Rp 8.39 trillion, far high than the Rp 971 billion made in 1999.

On companies' business performance, the JSX reported that 207 companies had recorded net profits as of Dec. 14, growing by 10 percent compared to the same period last year.

Another positive indicator was a surge in cash dividend payments in which 125 companies were able to afford to pay dividend this year as compared to only 55 companies last year.

The JSX noted a greater awareness for prudential management among publicly-owned companies, with only 11 being forced to be delisted from the stock market, compared to 20 companies last year.

Furthermore, local investors' share of the total market transactions rose to 80 percent this year compared to 65 percent.

Foreign investors made up only 20 percent of transactions in the capital market this year.

JSX president Mas Achmad Daniri attributed a higher awareness among Indonesians on the benefit of investing in the stock market.

But foreign investors have blamed JSX's small market capitalization behind their reluctance to invest in the Indonesian stock market.

Chairman of the New-York based investment firm Tocqueville Asset Management L.P. Franscois Sicart has said that the sharp depreciation of the rupiah against the dollar had sharply diluted the JSX's market size in foreign currencies.

Furthermore, only a small portion of the JSX's market value was actually available for the public, as a large portion was still controlled by founders of the companies and the government.

Daniri suggested that the government should divest its stakes in state owned enterprises through the stock market, to encourage foreign investors' confidence. (bkm)