Aditya Wikrama

Indonesian Bourse Steps Up Drive to Wake ‘Sleeping Stocks’

As the Indonesia Stock Exchange tries to entice more companies to list, it faces another problem.

About a third of the stocks on the bourse are illiquid and hardly ever traded. And because they do not attract analyst coverage from brokerages, there is very little reliable information about them for would-be investors.

According to the exchange, also known as the IDX, 100 to 150 stocks are not traded at all on an average day. These “sleeping stocks” pose a headache to investors, who are unable to find buyers for their shares.

Since February, the IDX has been working with state-owned credit rating firm PT Pefindo and the Indonesian Public Listed Companies Association (AEI) to generate research reports on the sleeping stocks.

Pefindo has been enlisted to write reports on them. The IDX is paying half of the Rp 40 million ($4,200) fee, while the companies in question are paying the rest.

AEI has been spreading the word on the benefits of the reports and encouraging its members to have them done.

IDX director Eddy Sugito said Pefindo has completed research reports on about 15 firms, with plans for another 50 next year.

He said trading in firms that have had research reports published already had begun to increase. But it remains to be seen whether the increased trading volume will be sustained, as investor interest in the companies wane, he said.

Pefindo president director Kahlil Rowter assured the Jakarta Globe that its reports are accurate and unbiased, even though the companies themselves are partially paying for them. “We certainly have no intention of brushing up the reports to make the companies look good,” he said.

Pefindo’s reports focus on the current fair value of the shares and, unlike equity research reports from brokerages, do not contain “buy,” “sell” or “hold” recommendations.

The IDX is also looking into requiring some of the state-owned brokerages, such as PT Bahana Securities and PT Danareksa Sekuritas, to buy and sell shares of the sleeping stocks to act as a catalyst to get the wider market interested.

However, the Capital Market and Financial Institutions Supervisory Agency (Bapepam) opposes the idea.

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