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Thirty stocks below Rp 50 baffle authorities
Thirty stocks are currently trading at Rp 50 (less than one US cent) apiece and are dormant, with authorities seemingly helpless to revive them
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hirty stocks are currently trading at Rp 50 (less than one US cent) apiece and are dormant, with authorities seemingly helpless to revive them.
Financial Services Authority (OJK) commissioner for capital market supervision Nurhaida first raised the issue last week, saying she had grown concerned about stocks trading at the minimum Rp 50 per share.
'This has become a concern for us. The shares are not being traded and they're barely moving,' Nurhaida said, adding that the OJK would look at ways of addressing the issue through cooperation with the Indonesia Stock Exchange (IDX), tempo.co reported.
The IDX, however, insisted that not much could be done to wake up the dormant stocks.
'That's the price investors consider the stocks to be worth,' IDX president director Tito Sulistio said on Friday.
The IDX would not evaluate the companies, he said, explaining that there was no justification for probing companies that submit correct financial reports, run their businesses in compliance with laws and regulations and do not engage in fraud.
The only possible course of action the IDX could take was to revise down the lower limit so as to encourage investors with lower prices, said IDX director for company listing Samsul Hidayat.
'However, we haven't made any concrete move in that direction yet. We have to think of the new price,' he said.
The IDX aimed, he added, to boost liquidity into the stock market to allow the bourse to set an optimal price mechanism.
In the meantime, the IDX would encourage companies with shares trading at Rp 50 apiece in the negotiated or secondary market to float more shares and increase their number of shareholders to enliven their stocks' trading.
Koneksi Kapital analyst Alfred Nainggolan said over the weekend that the bourse authority had limited options, including advising the companies in question to float more shares or asking them to expose their business plans and financial projections in a bid to lure more investors.
'Information disclosure is the main issue of such companies, putting investors in doubt whether to invest or not,' he said, adding that business fundamentals and financial performance were also pivotal for investors looking to invest in a company's stock.
Alfred said that the proposed IDX measure of lowering the lower minimum would do no favors to the stocks as they were already traded far below that limit in the negotiated market. 'Their prices will fall further,' he added.
Investa Saran Mandiri analyst Hans Kwee voiced a similar view, saying that investors would naturally pick stocks that performed well and leave the losers behind. 'This puts the authority in a difficult situation, because in reality its task is just to supervise the market,' he said.
Hans said that one concerning aspect for a market's stakeholders would be if certain stocks remained dormant while the Jakarta Composite Index (JCI), the stock index, picked up.
'There must be problems in the companies and no prospective business for them,' he said, adding that the core of stock trading was the value contained in companies.
