Listing Foreign Companies a Top Priority for IDX Chief
Faced with the huge task of boosting Indonesia’s equity market amid the euro debt crisis and a possible slowdown in the US economy, Ito Warsito, the newly re-elected chief executive of Indonesia’s stock exchange, vowed on Wednesday to woo foreign companies to list in the local market.
Ito, 50, who is in his second term, said allowing foreign companies to trade shares on the Indonesia Stock Exchange (IDX) is his main agenda in the next three years.
“Foreign companies are among the four groups of companies that IDX is targeting,” Ito said after a shareholders’ meeting.
He said he wanted to see more listed companies trading in the local market, both in terms of quality and quantity.
Ito’s comments came as some foreign companies such as CIMB Group and Maybank, two big lenders from Malaysia, sought listings in the IDX and the Bursa Malaysia, Malaysia’s main stock exchange.
“The Indonesia Stock Exchange already has our rules in listing a company, but there are some regulations in Capital Market and Financial Institution Supervisory Agency [Bapepam-LK] and Indonesian Central Securities Depository [KSEI] that need to be adjusted,” Ito said.
He also called on the KSEI, a self-regulatory body, to redefine its role in improving the trading and performance of the local equity market. He said custodian banks, which only represent the investors, should later be expanded to represent the foreign companies as well.
“Foreign companies would need the custodian banks to represent them here,” Ito said.
He hoped the regulation would be adjusted “by next year at the latest” and that the transition of the Bapepam-LK to the Financial Services Supervisory Authority (OJK) would not affect IDX operations.
Other than foreign companies, the other groups of companies the IDX is targeting are state-run companies, natural resources companies and big bank debtors. The exchange aims to have 500 listed companies in 2015, up from 446 according to data on IDX’s website. Total combined value of this more than 400 listed companies stood at Rp 3,703 trillion.
The IDX expects 25 new initial public offerings this year, but only five have taken place thus far.
According to Ito, several companies submitted their IPO proposals in April, leading to the slow growth. He said there were 10 companies waiting for approval for their IPOs from Bapepam-LK.
He said global market conditions at the moment might play a role in the low number of IPOs, but he noted that so far, only one company delayed its IPO citing the unfavorable market.
The benchmark Jakarta Composite Index, which climbed 1.4 percent to 3,934.87 on Wednesday, has risen 3.2 percent this year.
Last year, the IDX saw 25 new listings, the highest number of IPOs in a single year since 2001, which saw 32 IPOs.
Ito is also planning to re-size the block of shares to 100 shares per lot, from the current 500 shares.
“It may help [companies] expand their portfolio and increase their trading frequency,” he said.
Ito said last year that the local market was seeking to double its market value in the next four years and become the biggest stock exchange in Southeast Asia. Market capitalization could rise to $750 billion by 2015, he said, and he has been encouraging Indonesian companies to list their shares in the local stock market.