Will the IDX IPO boom last?

Written by Kapronasia || July 24 2023

The Indonesia Stock Exchange has been one of Asia’s top performers this year and globally among the top five exchanges by the amount of capital raised. The IDX has even outperformed the Hong Kong Stock Exchange (HKEX) thus far this year, raising US$2.2 billion as of June, according to Refinitiv data. There is reason to believe that the boom could continue for some time in Southeast Asia’s largest equity market.

Overall, IPOs have been on the rise throughout Southeast Asia this year, with the exception of Singapore, and Indonesia accounted for more than half of the market debuts in the first half of the year, according to Dealogic. The blockbuster deals were all Indonesian companies, which are tapping into rising demand from the burgeoning electric vehicle sector and broader decarbonization efforts.

To that end, in early July, Amman Mineral, Indonesia’s second-biggest copper and gold producer after Freeport Indonesia, raised US$711 million on the IDX in what was the largest market debut since GoTo raised US$1.1 billion in April 2022. Amman Mineral owns one of the world’s largest copper mines and posted a profit of US$1.09 billion in 2022, thrice as large as in 2021. Since copper is a highly efficient conduit (both thermal and electrical), it plays a key role in renewable energy systems to generate power from solar, hydro, thermal and wind energy.

Indonesia is set to continue benefiting from its abundance of precious metals. For instance, in has large cobalt deposits and accounts for about 25% of the world’s nickel reserves. Nickel and cobalt are also important for renewables. Like copper, they are used to make electrical vehicle batteries, while cobalt is integral for magnets used in wind turbines. Mining company Harita Nickel raised US$660 million in its April IPO, which was the biggest listing this year until the Amman Mineral deal.

Looking ahead, the IDX could see at least three more large listings over the next year. According to Nikkei Asia, which spoke with Indonesia’s Minister of State-Owned Enterprises Erick Thohir, the forthcoming deals are for Pertamina Hulu Energi, a larger upstream subsidiary of state oil giant Pertamina, palm oil producer PalmCo and fertilizer maker Pupuk Kaltim.

Meanwhile, the Hong Kong Stock Exchange may be set for a revival in the coming months. KMPG reckons that in the second half of the year HKEX will benefit from the newly launched Hong Kong Dollar (HKD) – Renminbi (RMB) Dual Counter Model and the forthcoming (in the fourth quarter) release of FINI, its innovative IPO settlement platform. “Such continued improvements to the stock exchange will continue to support Hong Kong’s position as one of the leading international financial centers in the world,” KPMG said in a research note.