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)