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Indonesia still 'attractive' for IPOs, rights issues
Businesses in many parts of the world have become reluctant to raise funds amid aggressive interest rate hikes led by the US Federal Reserve, but analysts say Indonesian companies benefit from a relatively supportive equity capital market.
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Changes in the IDX Composite index are displayed on a screen in a photo taken on Feb. 24, 2022. Indonesia’s equity market still offers plenty of opportunities for firms looking to raise capital, analysts say. (Antara/M Risyal Hidayat)
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usinesses in many parts of the world have become reluctant to raise funds amid aggressive interest rate hikes led by the United States Federal Reserve, but analysts say Indonesian companies benefit from a relatively supportive equity capital market.
During the first six months of the year, the number of initial public offerings (IPO) worldwide halved to 305 deals, while the proceeds received from these dropped by more than two-thirds to US$40.6 billion, with the largest drop happening in the Americas region, according to data from consulting and auditing firm Ernst & Young (EY).
Investment banks have noticed a slowdown in activity in Asia as well.
“Market-related activity is reduced in a volatile period like this. Things like IPOs are also reduced, because the volatility dampens the appetite for people to go public and for investors to put money into riskier propositions,” Citi Asia Pacific CEO Peter Babej told The Jakarta Post on July 21.
Read also: BI remains dovish despite rising inflation
Reny Eka Putri, senior quantitative analyst at state-owned lender Bank Mandiri, said on Monday that the market volatility was the effect of external factors.
She pointed to surging inflation due to supply disruption exacerbated by war in Ukraine and aggressive monetary tightening led by advanced economies, which could trigger more capital outflow from capital markets, especially in emerging economies.
