Stocks, rupiah to get firmer on PGN IPO: Analysts
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.