Jakarta’s top brokerage sees uncertainty spawning deals

JAKARTA • An expected spike in market volatility from global geopolitical events may create more opportunities for investors, brightening prospects for equity and debt underwriters, according to Indonesia’s largest brokerage.

PT Mandiri Sekuritas, a unit of the country’s second-largest bank by assets, expects to underwrite more initial share sales this year than in 2018, when it was involved in five initial public offerings (IPOs), president director Silvano Rumantir said. The securities firm, owned by PT Bank Mandiri Tbk, has already bagged the mandate to help with IPOs of three companies, including a mining firm, he said.

“Whenever there’s a political event, or geopolitical event, there will be volatility and that means opportunities,” Rumantir said in an interview. “We are certainly hopeful we can grow from last year and we will increase our presence in the private sector space and get more share in the advisory business.”

With foreign investors returning to Indonesian shares this year, the benchmark index is on course to hit a fresh record and that may encourage companies looking to raise more funds. Indonesia saw a record number of IPOs last year even as the nation was swept in an emerging-market rout triggered by rising US interest rates and dollar.

“Foreign investors have a very positive outlook on Indonesia for now because we have a decent growth with a reasonable valuation,” said Tjandra Lienandjaja, deputy head of equity research at Mandiri Sekuritas. “The inflow seems to be a reversal after investors dumped Indonesian equities last year.”

Foreign investors have bought a net US$716 million (RM2.94 billion) of Indonesian stocks through Jan 28, on course for the biggest monthly inflow since April 2017. They were net sellers of a record US$3.66 billion in 2018, according to data compiled by Bloomberg.

Mandiri expects more Indonesian companies to tap alternative financing such as asset securitisation, Rumantir said. Toll-road operator PT Jasa Marga and flag carrier PT Garuda Indonesia are among companies which have raised funds through securitisation, where borrowers use future earnings as underlying assets rather than diluting the equity. — Bloomberg