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NEWS UPDATES Asean Affairs                      12  August 2011

Indonesian bourse to see more IPOs

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As many as 10 more companies could be listed on the stock exchange by the end of this year amid confidence that local investor interest would drive demand in spite of global market volatility, a bourse official said.

Eddy Sugito, a director at the Indonesia Stock Exchange (IDX), said 10 companies were expected to issue initial public offerings in the second half, which would raise an estimated combined total of Rp 10 trillion ($1.17 billion).

Coal miners Atlas Energi Resources and Golden Energy, telecommunications infrastructure firm Solusi Tunas Pratama and SMR Utama, a mining and natural resources company, have submitted proposals for company listings, he said.

"We remain positive. So far, there are four or five companies that have submitted their proposals to list in the local market this year," Eddy said on Wednesday as the exchange celebrated its 34th anniversary.

That would bring the total listings this year to 25. In 2010, 22 companies raised Rp 29.3 trillion from floats on the exchange.

Stock markets globally have been volatile in the past few weeks on concerns Europe's debt crisis may worsen and that US economic growth will continue to slow.

Eddy said the IDX would maintain its original forecast of 25 domestic companies floating shares this year. Indonesia's benchmark index, which has risen 4.5 percent so far this year, is forecast to hit the 4,500 mark this year, according to Recapital Securities. The Jakarta Composite Index rose 46 percent last year.

Visi Media Asia may submit an application for share listing again after the Capital Market and Financial Institution Supervisory Agency (Bapepam) requested clarification on its online book-building procedures, Eddy said. The free-to-air broadcaster and online news portal operator is joined by at least two other companies considering share sales in the second half, coal miner ABM Investama and a subsidiary of Trakindo Group, a heavy equipment distributor.

ABM could be listed by October with a plan to sell a 20 percent share in the company, Eddy said, without elaborating on the value of the possible IPO.

As of July, 15 companies had listed on the IDX, including flag carrier Garuda Indonesia, plantation companies Jaya Agra Wattie and Salim Ivomas Pratama, cosmetic maker Martina Berto and property developer Metropolitan Land. Those companies raised a combined Rp 11.7 trillion.

Garuda alone raised Rp 4.75 trillion by selling 6.34 billion shares in February this year.

Eddy said that while the IDX could feel the impact of deteriorating global market sentiment stemming from a possible slowdown in the US economy, the bigger picture was bright. "In the longer term, Indonesia has very strong fundamental support and the market should benefit from the uncertainty in the US and European economies," he said.

Analysts echoed similar sentiments, saying that if the valuations were attractive, investors would still buy up shares.

"Market sentiment will remain," said Edwin Sebayang, head researcher at MNC Securities. "The macroeconomic condition and corporate fundamentals are sound. In IPOs, the main determinant is valuation. If valuation is attractive, the market will absorb."

As for the mining companies' prospects, eTrading Securities' Bertrand Raynaldi said the sector was crucial to the country's industries, meaning demand would remain strong as long as there was economic growth.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
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