Why IDX is having a good year

Written by Kapronasia || May 23 2023

While many IPO markets are lukewarm at best this year, the Indonesia Stock Exchange is doing comparably well. Globally in the first quarter, a total of 299 IPOs raised US$21.5 billion, a sharp decrease of 61% over the same period a year earlier. The usual suspects are responsible: high interests, stubborn inflation, geopolitical tumult – as well as some big and unexpected bank failures. Yet IDX had a cracking Q1: Its US$1.45 billion in IPO proceeds from January to March was its best-ever first-quarter tally, outstripping Hong Kong, Tokyo and London.

IDX has some unique factor working in its favor at a difficult time for capital markets globally. For instance, Indonesian state-owned enterprises have been going to public to reduce their reliance on the federal budget.

A drive by Southeast Asia’s largest economy to integrate itself into the global electric vehicle supply chain is also prompting firms to take advantage of high investor interest in the sector. The biggest listing of the year so far – and the largest since GoTo raised US$1.1 billion in April 2022 – came in April when Harita Nickel surged on its debut, raising more than US$672 million and achieving a valuation of more than US$5.5 billion.

With its joint venture partner, Chinese mining company Ningbo Lygend Mining, Harita runs Indonesia’s first high-pressure acid leaching (HPAL) plant on Obi Island in North Maluku province. The smelter is capable of processing low-grade nickel into mixed hydroxide precipitate (MHP), which can be used in EV battery production.

The No. 2 on IDX so far this year is also a nickel producer, Merdeka Battery Materials, which raised US$620 million in mid-April. Merdeka Battery's share price rose on its debut day of trading by 11% to close at 885 rupiah. The company is a subsidiary of Merdeka Copper Gold, which counts Chinese battery giant Contemporary Amperex Technology as a minority shareholder.

“The EV theme remains strong, I think it is one of the bright spots for equity capital markets at the moment,” Udhay Furtado, co-head of equity capital markets for Asia-Pacific at Citigroup, told Bloomberg in April. “We expect several large Indonesian IPOs coming to market from that sector.”

Other upcoming IPOs on IDX this year include the upstream arm of state energy company Pertamina that could raise up to $2 billion, and state-owned fertilizer company Pupuk Kalimantan Timur that could raise $500 million.