As the Market Swings Wildly, Firms Strap In And Go Ahead With Offerings
A volatile equity market has not done anything to dissipate the appetites for initial public offerings as companies seek funds to expand, a senior executive at the Indonesia Stock Exchange has said.
“Interest is still there,” Eddy Sugito, a director at Indonesia Stock Exchange (IDX), said on Friday. “The matter of timing depends on each company. Some might want to proceed with an IPO, while others might want to wait for better value.”
With increasing uncertainty over Greece’s potential exit from the euro zone, the global market has been extremely volatile in the past few months. The Jakarta Composite Index, Indonesia’s benchmark stock index, has lost 0.6 percent this year, and has tumbled 10 percent from its all-time high of 4,224, which was set on May 3.
The JCI lost 33.06 points, or 0.9 percent, to 3,799.77 on Friday. That is its lowest closing mark since Dec. 28. The index lost 2.6 percent last week, marking a fourth straight week of losses.
Eddy said six companies were in the process of planning IPOs. They are supermarket operator Supra Boga Lestari; heavy equipment distributor Kobexindo Tractors; coal miner Toba Bara Sejahtra; TV cable operator MNC Skyvision; mobile phone distributor Global Teleshop; and textile company Trisula International.
Supra Boga Lestari, which operates Farmers Market and Ranch Market supermarkets, saw substantial demand for its shares at its pre-offering last week. The company set a price of Rp 500 per share for its IPO, the upper range of its offering price.
Ito Warsito, the president director of the Indonesia Stock Exchange (IDX), is equally optimistic about IPOs this year. He said much of the decline on the exchange this year was the result of frightened foreign investors.
Foreign trading activity accounted for about 43 percent of total trading on the IDX this year as of Friday, according to data from the exchange.
“This kind of situation is usually short term. Local investors should be brave and go against the current,” Ito said. “When foreign investors are selling, it should be a chance for local investors to buy.”
He believes the JCI volatility will end soon, with solid earnings from local companies and sound fiscal and monetary policies from the government. Investors should take the chance to pick up bargains while share prices are low, he added.
Johanes Soetikno, managing director at Valbury Asia Securities, one of the underwriters for Kobexindo’s IPO, which is scheduled for June 20-22, said he was not overly concerned about the timing.
“In June, market sentiment is usually helped by earnings results,” he said. “By the time of our IPO listing, the market should be better.
Octavianus Marbun, an analyst from brokerage Waterfront Securities, however, wasn’t nearly as confident, predicting the JCI would still be weak.
Investor Daily, JG