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IDX has record year for IPO funds, listings
The COVID-19 pandemic and the continuing growth of the digital economy helped the local bourse break new ground.
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he country’s stock market finished the year with record highs in initial public offerings (IPO) and investor numbers, despite a slide in the Indonesia Stock Exchange (IDX) Composite index on the year’s last trading day on Thursday.
“Investors and markets remain optimistic about Indonesia’s economy and capital market outlook. This can be seen by increased trading activities, IPOs and numbers of investors,” IDX president director Inarno Djajadi told reporters on Thursday.
This year, the total funds raised through IPOs reached an all-time high of Rp 62.61 trillion ($4.39 billion), compared to the usual of between Rp 10 trillion and 20 trillion annually, aided by the jumbo IPO of e-commerce platform Bukalapak in July.
Meanwhile, the number of portfolio investors increased 92.7 percent annually to 7.47 million this year, the highest growth rate since 2016, according to Indonesian Central Securities Depository (KSEI) data.
The number of stock investors alone grew by 103 percent annually to 3.44 million in the same period, and retail investors dominated stock market trading for the first time ever, accounting for an average of 56.2 percent of daily trading volumes, compared to 48.4 percent last year.
The IDX Composite slid 0.29 percent to 6,581 on Thursday, but managed to close above 6,700 for the first time in the bourse’s history in November.
Read also: Indonesian portfolio investors grow at five-year high in 2021
Anugerah Mega Investama director Hans Kwee said separately on Thursday that low interest rates during the pandemic had driven investors to look for better returns in stock markets and that continued mobility restrictions had led to a build-up of idle funds, a portion of which had gone into stocks.
He added that the rise of investment apps had helped accelerate the growth of portfolio investors, who in turn attracted the attention of companies looking for fresh funds at a time when banks were more reluctant to disburse loans because of pandemic uncertainty.
“We can expect this trend to continue into next year, as investment awareness will still increase, while banks will still be quite selective on disbursing loans,” Hans said.
Young investors
KSEI president director Uriep Budhi Prasetyo noted on Thursday that the rise of fintech start-ups was a main driver behind the high growth of individual investors, as around 73.99 percent of these investors had opened investment accounts through a fintech brokerage.
Fintech brokerages also dominated mutual fund transactions with a 125 percent annual increase to 18.23 million transactions this year.
“Almost 74 percent of investors had an account on a fintech brokerage. Fintech has had a significant role in helping investor growth,” he said.
IDX development director Hasan Fawzi noted that young investors, particularly millennials and younger, showed a greater tendency to invest in stocks outside LQ45 Futures – the IDX’s most liquid index consisting of companies with high market caps and good fundamentals – than older investors.
“Now, transactions outside LQ45 index stocks are more dominant and are dominating daily transactions,” Hasan said.
He added that young investors showed greater appetite for companies in the technology sector, such as digital banks and unicorns, as well as for companies with environmental, social and governance (ESG) credentials.
Read also: Year-ender: Tech industry buoys IDX in 2021
Most IPOs in ASEAN
In 2021, the IDX listed 54 new companies, the highest number of any ASEAN country, bringing the bourse’s total to 766 companies as of December. The IDX’s Inarno said the bourse aimed to welcome even more companies in 2022.
The biggest IPO was that of Bukalapak, which raised Rp 21.9 trillion (US$1.5 billion), worth around 25 percent of its enlarged capital, taking the title of biggest IDX listing from coal miner PT Adaro Energy, which raised $1.3 billion in 2008. News of Bukalapak's local listing triggered a spike in the IDX technology sector subindex (IDXTECHNO). The company is now trading at less than half its IPO price.
IDX assessment director I Gede Nyoman Yetna said on Thursday that investors showed a preference this year for IPOs from companies in the technology, infrastructure, basic materials, financial and consumer good sectors, a trend expected to carry over into next year.
“We hope all sectors will move, but this preference is apparent,” Nyoman said.
