IDX pres­i­dent di­rec­tor Tito Sulis­tio said on Tues­day dur­ing the open­ing of the first day of trad­ing in 2017 that it ex­pected to see 30 com­pa­nies go pub­lic this year, fol­low­ing an im­proved eco­nomic sit­u­a­tion and higher de­mand for stocks in the mar­ket.

“As the [Bank In­done­sia rate] drops, pen­sion funds and in­sur­ance com­pa­nies can­not just de­pend on fixed in­come [in­vest­ment in­stru­ments]. They will re­al­lo­cate their in­vest­ments to stocks,” he said.

As many as four­teen firms — sub­sidiaries of state-owned en­ter­prises (SOEs) — are look­ing to go pub­lic this year, with some firms en­gaged in the in­fra­struc­ture sec­tor.

Ac­cord­ing to Kon­tan, two firms have at least shown com­mit­ment, namely in­sur­ance com­pany Tugu Pratama In­done­sia, a sub­sidiary of state-run oil and gas gi­ant Per­tam­ina, and Garuda Main­te­nance Fa­cil­ity, a sub­sidiary of na­tional flag car­rier Garuda In­done­sia.

Vice Pres­i­dent Jusuf Kalla said the gov­ern­ment would con­tinue to ease the pro­ce­dures for SOEs and their sub­sidiaries to go pub­lic in or­der to boost the stock mar­ket’s cred­i­bil­ity and growth and at the same time, open the door for firms to raise fi­nanc­ing.

The cur­rent IPO process is rather lengthy and com­pli­cated be­cause SOEs need to ob­tain a per­mit from the House of Rep­re­sen­ta­tives be­fore of­fer­ing their shares to the pub­lic.

Bloomberg re­cently re­ported that bonds, cur­ren­cies and stocks in Asia’s emerg­ing mar­kets that were less de­pen­dent on ex­ter­nal de­mand, such as In­dia and In­done­sia, were the most pop­u­lar picks for in­vestors and strate­gists next year.

IG Asia, for in­stance, fa­vors In­done­sian, In­dian and Philip­pine eq­ui­ties. Amid sub­dued growth and an un­cer­tain trade sit­u­a­tion go­ing into 2017, economies with strong do­mes­tic fun­da­men­tals ap­pear to be “most promis­ing”, said Jingyi Pan, a mar­ket strate­gist in Sin­ga­pore.

In her view, “any dips close to the 5,000 level would make for a good en­try”, into the Jakarta Com­pos­ite In­dex (JCI).

The JCI, a bench­mark for the IDX, opened at 5,296.71 on the first day of trad­ing, an in­crease of around 17 per­cent com­pared to the first trad­ing day of 2016.

As more com­pa­nies jump on the IPO band­wagon, the IDX ex­pects to in­crease its mar­ket cap­i­tal­iza­tion to Rp 6.25 quadrillion (US$463.48 bil­lion) in 2017 from Rp 5.76 quadrillion in 2016.

The bourse is eye­ing a higher num­ber of stock bro­kers as well, hop­ing to dou­ble the num­ber to 5,400 this year so that av­er­age daily trans­ac­tions can reach Rp 8 tril­lion from Rp 7.49 tril­lion last year.

Mean­while, data from the IDX re­vealed that 2016 was a dif­fi­cult time for com­pa­nies to con­duct an IPO, with only 16 com­pa­nies list­ing their shares on the stock ex­change, far from the IDX’s tar­get of 25 com­pa­nies or its ear­lier aim of 35 com­pa­nies.

Mi­rae As­set Seku­ri­tas In­done­sia re­search head Taye Shim said In­done­sia still faced chal­lenges from a stronger US dol­lar and ris­ing in­ter­est rates. How­ever, he is op­ti­mistic that In­done­sia’s core fun­da­men­tals are strong enough to with­stand ex­ter­nal shocks.

“Given that earn­ings are in the ex­pan­sion­ary cy­cle, cou­pled with a re­cov­ery in com­mod­ity prices, we con­tinue to be­lieve that In­done­sian eq­ui­ties re­main at­trac­tive. Our JCI tar­get for 2017 stands at 5,963,” he said in a state­ment.

Ba­hana Se­cu­ri­ties se­nior as­so­ciate di­rec­tor and head of strat­egy and re­search Harry Su said in­vestors were ac­tu­ally split on the out­look of com­modi­ties for the stock mar­ket in 2017.

Around 50 per­cent of the in­vestors Ba­hana vis­ited at its “road shows” be­lieve com­mod­ity prices have run their course and there­fore carry sub­stan­tial down­side risks from cur­rent lev­els.

On the other end of the spec­trum, some in­vestors be­lieve that the mar­ket con­sen­sus has been slow to re­vise up com­mod­ity price as­sump­tions, sug­gest­ing pos­si­ble up­side po­ten­tial in eq­uity prices.

“On a more neg­a­tive note, many of the Euro­pean in­vestors we met at the road shows were obliv­i­ous to In­done­sia’s per­ilous po­lit­i­cal sit­u­a­tion and how the Ahok [Jakarta Gover­nor Ba­suki “Ahok” Tja­haja Pur­nama] case could be an im­por­tant de­ter­mi­nant of not only in­vest­ment into the coun­try but also a pre­cur­sor of what’s to come in the 2019 pres­i­den­tial elec­tion,” he wrote in a re­search note.

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