JSX may not reach target for new issuers
JSX may not reach target for new issuers
JAKARTA (JP): Executives of several securities companies have
estimated that the Jakarta Stock Exchange's (JSX) expectation of
30 to 35 new share issuers this year will not be met due to a
concentration on large-sized issues.
A director of PT Asian Development Securities, Ikeda, noticed
that the government's announcement on the planned flotation of
three state-owned companies this year has induced investors'
concentration away from smaller firms planning to go public.
Minister of Finance Mari'e Muhammad said in a hearing with the
House of Representatives last week that three state-owned
companies -- PT Jasa Marga, PT Krakatau Steel and PT Bank Negara
Indonesia -- will go public this year.
"Following the announcement, investors must have been busy
trying to anticipate the timing of the offerings," he said.
In addition to investors' concentration, according to Ikeda,
other private issuers, which are generally smaller and less
attractive, are now waiting for the fixed schedules of the three
state companies' initial offering.
Ikeda told The Jakarta Post that such fixed schedules would be
helpful to bring other companies to the market earlier this year.
"They need to know the time when the market is able to absorb
their offerings," he said.
He cited an example that concentration on PT Telkom's initial
offering last year resulted in the negative performance of most
new issuers, including another state-owned company, PT Tambang
Timah.
Last year, seven companies -- Tambang Timah, PT Miwon, PT
Suryamas Dutamakmur, PT BDNI Reksadana, PT Elang Realty, PT
Komatsu Indonesia and PT Bhuwanatala Indah Permai -- went public
in October, just a few weeks before Telkom's offering.
Miwon even failed in the primary market and caused its
underwriter, who had to pay for unsold shares, cash problems.
Ikeda said that the share prices of those companies dropped
below their initial offering price due to market weakness as
investors were preparing themselves to buy Telkom shares.
The JSX's president, Hasan Zein Mahmud, said recently that "it
was a pity that new issuers did not take advantage of the bullish
sentiment earlier this year".
"Unlike last year, when some new companies were listed in
January, the JSX will not see any new issuers until the end of
March," a director of PT Sigma Batara, Ignasius Yonan told the
Post.
Ignasius said that it is a misleading perception to think that
the market's sentiment has been bullish or to assume that it is
the right time for new listings.
On the contrary, he noted that current market sentiment is
another reason for new issuers' hesitation.
"Although the JSX composite index moved up by 82 points to 595
points last week, it was not a sign of a bullish market," he
contended.
The JSX composite index closed at 513.8 points on Dec. 28,
1995.
He added that the market was actually driven by not more than
10 percent of the 238 counters on the exchange.
In January, the top 20 companies in terms of trading volume
and value accounted for 59.5 percent and 68.6 percent of the
total transactions respectively.
The figure indicated that transactions on the exchange were
dominated by a relatively small number of listed companies.
He noted that the domination of big cap stocks has not only
lifted JSX share prices by 16 percent but also given a signal of
negative sentiment on small and medium size companies.
Ignasius came to the conclusion that it would not be easy for
small and medium size issuers, with a market capitalization of
less than Rp 500 billion (US$21.5 million), to gain the market's
attention now.
He also predicted that none of the three state-owned companies
will go public in the first half of this year.
"Therefore, the government has to arrange the offering
schedules carefully to avoid market destabilization," he added.
(08)