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Strong Indonesian stock trading debuts to attract more IPOs
May 14, 2014 / 1:53 PM / 4 years ago

Strong Indonesian stock trading debuts to attract more IPOs

JAKARTA/SINGAPORE (Reuters) - A string of strong trading debuts in Indonesia could draw more companies to the Jakarta Stock Exchange this year, as share prices rise along with the prospect of political change.

Shares of packaging and printing company PT Dwi Aneka Jaya Kemasindo (DAJK.JK) rose as much as 10.6 percent above their initial public offering (IPO) price on their debut on Wednesday.

On the same day, the benchmark share index .JKSE reached a near one-year high after the second-largest political party declared support for the presidential candidacy of Jakarta Governor Joko "Jokowi" Widodo.

Commentators say former businessman Jokowi is more likely to be pro-business than nearest rival and ex-general Prabowo Subianto, and that his reputation as a reformist is likely to be widely welcomed in the July presidential election.

“We had wanted to do an IPO last year,” Dwi Aneka Finance Director Witjaksono told reporters. But “now is the best moment and the political issue is all right.”

The prospect of a Jokowi presidency has lifted investor sentiment, helping push up the debut stocks of Dwi Aneka as well as of television station operator PT Intermedia Capital (MDIA.JK), building materials maker PT Wijaya Karya Beton (WTON.JK) and cinema chain operator PT Graha Layar Prima (BLTZ.JK).

The political momentum and strong trading debuts can only bring more companies to the market, analysts say.

“I think the Indonesian IPO pipeline is there. It will likely be dominated by the smaller IPOs - companies with a market value below $1 billion,” said Maynard Arif, head of research at DBS Vickers in Indonesia.

Big institutional investors, however, may wait until the election outcome before buying into any larger listings, Arif said.

Internet service provider Link Net aims to raise as much as 486 billion rupiah ($42 million) by listing this year, Ferry Budiman Tanja, head of the IPO’s underwriter Ciptadana Securities, told Reuters on Wednesday.

Link Net priced its IPO at the top of a 1,575 rupiah to 1,600 rupiah range, Tanja said.

The government has also approved the planned IPOs this year of two state-owned plantation firms, PT Perkebunan Nusantara V and PT Perkebunan Nusantara VII.

Editing by Christopher Cushing

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