The price closed at  Rp 1,270 , a 49 percent increase from its IPO price of  Rp 850, making the steel company the top gainer during the trading day, they said.

“Many local investors who failed to buy during the initial public offering [IPO] made heavy purchases in the secondary market as they thought that the company’s share prices remained relatively cheap,” Recapital Securities head of research, Pardomuan Sihombing, said.

He said foreign investors who received significant allotments during the IPO sold their shares at a profit.

According to the exchange’s data, foreign funds sold Krakatau shares worth about Rp 378.69 billion on the day, reducing foreign investors holding in the state owned steel company’s shares down to 5 percent from the previous 7 percent.

As reported earlier, several groups of economists opposed the government’s plan to float Krakatau’s shares on the nation’s stock exchange due to suspected unfair practices in share allocation.

They said the government’s decision to fix the company’s share price at Rp 850 each during the IPO was due to pressure from politically connected businessmen.

The government previously set a price range of between Rp 800 and Rp 1,150 for the IPO. It then fixed the price at Rp 850 each despite  heavy demand.

The sharp increase in the Krakatau shares Wednesday also helped the Jakarta Composite Index (JCI) to maintain its upward trend. The index was closed at a new record level of 3,756.97, a 0.52 percent rise on the previous day’s close.

Marwan Batubara, director of  Indonesian Resources Studies (IRESS), acknowledged that Krakatau’s IPO price was too cheap given the company’s book value which reached  Rp 1,500 per share. But a special team formed by the State-Owned Enterprises Ministry through a ministerial decree did not find any foul play in Krakatau’s IPO process, including in share pricing, he said.

Capital market regulators have promised to probe the Krakatau share allotments to look at the rumors that share allocations had benefited certain investors.

Krakatau offered 3.15 billion shares representing 20 percent of its enlarged equity between Nov. 2 and Nov. 4, with underwriters including Mandiri Sekuritas, Danareksa Sekuritas and Bahana Securities.

Credit Suisse and Deutsche Bank were also  appointed as international selling agents for the shares offer.

Krakatau shares were the heaviest traded by value on the nation’s stock exchange on Wednesday, with 1.66 billion shares changing hands and the total transaction reaching Rp 2.31 trillion,  amounting to 30.44 percent of the overall stock exchange’s total trading volume of Rp 7.59 trillion during the day.

Popular

Growing discontent with policymaking keeps students on streets

Protest works

US disputes Iranian claims about closing Strait of Hormuz