Vinnilya, Jakarta – The number of companies going public through initial public offerings (IPOs) in 2024 has dropped sharply compared to last year, with just 34 IPOs by the end of September, less than half of the 79 in 2023. The total capital raised also plummeted to just Rp 5.15 trillion ($330.94 million), compared to Rp 54 trillion in 2023.
Nico Laurens, Head of Research at Panin Sekuritas, cited global economic uncertainty, high interest rates, and geopolitical tensions as key factors dampening investor confidence. "High interest rates make assets less attractive, weakening market sentiment," Nico said during the Investor Daily Talk on Friday.
The Fed had begun lowering its main interest rate for the first time in more than four years and indicated more cuts would arrive through next year. Meanwhile, The Bank of Japan has begun very gradually raising its benchmark rate from near zero. It now stands at around 0.25 percent.
Geopolitical tensions in the Middle East, particularly between Iran and Israel, have also contributed to global uncertainty.
On the domestic front, Nico pointed out that the Jakarta Composite Index (JCI) had reached an all-time high (ATH). "Investors are worried that stock prices might decline after they enter the market since prices are already at their peak," he said.
Nico noted that the quality of recent IPOs has not been as strong compared to previous offerings. This has led investors to view the IPO market as prioritizing quantity over quality. However, he added that recent developments indicate a more rigorous selection process for companies seeking to list on the Indonesia Stock Exchange (IDX).
Despite the slow market, Jeffrey Hendrik, Director of Business Development at IDX, said that 25-30 companies are still in the pipeline for public offerings by the end of the year. He reassured the market that a recent scandal involving IDX employees accepting bribes during the IPO process would not affect the targets.
In response to the scandal, IDX dismissed five employees from the Corporate Valuation Division between July and August 2024. These employees, responsible for assessing potential issuers, were found to have solicited money and other forms of gratification in exchange for favorable IPO evaluations.
The bribery scheme allegedly involved several companies now listed on the exchange, with the bribes ranging from hundreds of millions to one billion rupiah per company. Further investigations revealed that the individuals involved had established a consulting firm, accumulating approximately Rp 20 billion through the scheme.
Source: https://jakartaglobe.id/business/amid-global-headwinds-indonesias-ipo-market-slumps-in-202