Stocks, rupiah to get firmer on PGN IPO: Analysts
Rendi A. Witular, The Jakarta Post, Jakarta
The Jakarta Composite Index and the rupiah are expected to surge higher this week after the week-long Idul Fitri holiday, with the privatization of state-owned gas distributor PT Perusahaan Gas Negara (PGN) being the latest impetus for the drive.
Adrian Rusmana, stock analyst at PT BNI Sekuritas said that the initial public offering (IPO) of PGN coupled with the traditional year-end "window dressing" activities would lift sentiment in the stock market.
The Index closed higher before the holiday on Nov. 21 at 617.08, against 610.33 the week before. The Index touched its lowest point in seven weeks on Nov. 19 at 601.93 on the lack of positive news.
"Trading for this week and for the whole month will be bullish with some news coming up, such as year-end corporate earnings and the sale of PGN."
"The Index for this week will likely be pushed to between 620 and 625 with a chance of getting even stronger toward 650 at the end of the year," said Adrian.
The government is set to sell 30 percent of its shares in PGN to the public through an IPO, with the offering is scheduled to take place from Dec. 8 to Dec. 10, and the shares will be listed in the local stock exchanges on Dec. 15.
The IPO will be priced between Rp 1,300 per share and Rp 2,100 each, with the government expecting to raise between Rp 1.2 trillion (US$142 million) and Rp 2 trillion in cash.
The stock index usually moves upward ahead of an IPO of state- owned enterprises.
For example, before Bank Mandiri, the country's largest bank in terms of assets, started its listing debut on the Jakarta Stock Exchange (JSX) on July 4, the Index skyrocketed from 398.05 on April 1. to 534.96 on July 14, the highest in a year.
The same condition is also seen during the IPO process of state-owned Bank Rakyat Indonesia, the country's fourth largest bank in terms of assets. The Index jumped to a 34-month record high of 652.75 on Oct. 10, a month before BRI listed its shares on the JSX.
Many analysts have said that the government is backing up the surge in the Index before the IPO of the two banks in order to help jack up their share prices.
They believed the government had been using state insurance firms, such as PT Jamsostek, PT Taspen and PT Jiwasraya, to pour money into the stock market in order to move the market.
Meanwhile, other Asian bourses lacked direction on Friday after Wall Street was closed for a public holiday, although positive economic data in some markets sent their stocks higher.
Tokyo, however, was lower after news that Japan's jobless rate worsened in October and industrial output showed a smaller-than- forecast gain.
Elsewhere, a currency analyst with a state-owned bank said worsened in Octthat the PGN IPO would be good news for the rupiah as foreign forecast gain. investors would need to convert its currency to the local unit to make payments for the PGN shares.
He said that the strong demands for the rupiah, which would be reflected in this and next week's trading, would put pressure on the dollar.
The rupiah, in last week's trading, ended lower at Rp 8,510 against the dollar compared to Rp 8,500 the week before.
"The rupiah will likely be pushed to the Rp 8,200-Rp 8,400 level this week, with chances of it getting even stronger," he said.
This, coupled with the recent rally in the euro and the regional currencies against the greenback means the rupiah has a good chance of strengthening, he said.
The euro charged to a record high of above $1.20 on Friday as concerns about the large U.S. current account deficit returned to haunt the greenback.