The Indonesia Stock Exchange (IDX) will increase the minimum ratio of shares that need to be listed on the IDX by a listed company. Through Regulatory No. I-A regarding the Listing of Shares & Equity Securities other than Shares Issued by Listed Companies (Peraturan Nomor I-A tentang Pencatatan Saham dan Efek Bersifat Ekuitas yang Diterbutkan oleh Perusahaan Tercatat), the minimum ratio of publicly issued shares is 7.5% of a company's total enlarged capital. If companies will not comply, they may face de-listing from the IDX.

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On Sunday 5 January 2014, Indonesia Investments released its latest newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on during the last seven days on our website. Most of the topics involve economic matters such as an update on Indonesia's inflation and current account deficit, initial public offerings (IPOs) in 2014, car sales, the Financial Services Authority (OJK) and Indonesia's aviation industry.

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Same as last year's result, the Indonesia Stock Exchange expects 30 Indonesian companies to conduct an initial public offering (IPO) in 2014. Ito Warsito, Director of the Indonesia Stock Exchange (IDX), said that 15 companies are targeted to become listed on the exchange in the first half of 2014. In January 2014, Link Net, Bank Panin Syariah, Bank Ina Perdana as well as Asuransi Mitra Maparya are expected to become listed companies as they have already been granted approval for this corporate action.

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The central bank of the United States, the Federal Reserve (FED), announced that it will start winding down its quantitative easing program in January 2014. Currently, the Fed purchases USD $85 billion worth of bonds per month but this amount will be reduced to USD $75 billion next month. The Fed came to this decision as prospects of the US labor market have shown a marked improvement, while economic growth is expected to accelerate to between 2.8 and 3.2 percent in 2014 and between 3.0 to 3.4 percent in 2015.

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On Wednesday (18/12), PT Industri Jamu dan Farmasi Sido Muncul, better known as Sido Muncul Herbal, was the 30th company that became listed on the Indonesia Stock Exchange (IDX) in 2013. The company, Indonesia's largest herbal medicine producer, offers 1.5 billion shares (about ten percent of its enlarged capital) to the public for the price of IDR 580 per share, thus aiming to generate IDR 8.7 trillion (USD $72.5 million) from today's initial public offering (IPO).

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Various analysts believe that the benchmark stock index of Indonesia (the Jakarta Composite Index or IHSG) can make a good jump in 2014 to the level of between 5,000 to 5,300 points (from 4,182 currently) despite the looming end of the Federal Reserve's quantitative easing program (QE3) which may result in temporary capital outflow from Indonesia's capital markets. The analysts believe that positive internal developments will provide solid support for the IHSG. These developments include the trade balance, rupiah exchange rate and general elections.

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Sawit Sumbermas Sarana (SSMS), a palm oil plantation company that conducted its initial public offering (IPO) on the Indonesia Stock Exchange on Thursday (12/12), aims for a 15 percent growth (yoy) in net profit in 2014 to IDR 207 billion (USD $17.3 million) as the price of crude palm oil (CPO) is expected to improve. The company's listing on the stock exchange (IDX) was a success, rising almost 12 percent on its debut, supported by foreign enthusiasm. Foreign institutional investors bought 81 percent of the stocks that were issued.

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In Bank Indonesia's Board of Governors' meeting - held on Thursday (12/12) - it was decided to keep the country's benchmark interest rate (BI rate) at 7.50 percent. Executive Director of Bank Indonesia's Communication Department Difi A. Johansyah said that the current rate of 7.50 percent is in line with the institution's inflation target of 4.5 percent (plus or minus one percent). The lending facility and deposite facility (Fasbi) rates are also maintained at 7.5 percent and 5.75 percent respectively.

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Yesterday (10/12), the 28th initial public listing (IPO) in 2013 on Indonesia's Stock Exchange was conducted. Financing company Indomobil Multi Jasa - with company code IMJS - offered 450 million shares, or 10.4 percent of its stake, to the public with a price tag of IDR 500 per share. The company is a subsidiary of Indomobil Sukses Internasional (IMAS), Indonesia's second-largest automotive distributor after Astra International. Through the IPO, the company aims to obtain IDR 225 billion for business expansion.

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The Indonesian rupiah exchange rate maintained its downward trend on Wednesday (27/11). Bank Indonesia's mid rate depreciated 0.41 percent to IDR 11,813 per US dollar. Investors remain concerned about Indonesia's wide current account deficit. Today, Finance Minister Chatib Basri said that the current account deficit will be around USD $30 billion by the end of 2013, significantly up from USD $24 billion at the end of 2012. In the third quarter of 2013, the current account deficit was USD $8.4 billion (3.8 percent of Indonesia's GDP).

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Despite mixed European and American markets on Wednesday (23/01) and declining Asian markets on Thursday (23/01) as these responded to weak Chinese manufacturing data and South Korea's Q4-2013 GDP outcome, it was unable to block Indonesia's benchmark stock index (Jakarta Composite Index or IHSG) from extending its upward movement. The IHSG was supported by various positive company releases, including financial results of 2013, capital expenditure announcements, and new products or services releases.

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The upward revision of the IMF's outlook for global economic growth (raised to 3.7 percent) was able to boost several commodity prices. This then was a reason for investors to purchase mining stocks, which made a positive impact on the performance of Indonesia's benchmark stock index (known as the Jakarta Composite Index or IHSG) on Wednesday (22/01). Stocks in the consumer and trade sectors were also popular as speculation emerged that demand for consumer goods will rise due to the severe floods in several cities in Indonesia.

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The forming of a morning doji star indeed indicated that there was potential for continued upward movement of Indonesia's benchmark stock index (Jakarta Composite Index or IHSG) despite the profit taking actions that emerged and limited the gain of the index (particularly those stocks that went into the overbought area). Factors that contributed positively to today's (21/01) performance of the Jakarta Composite Index were rising Asian stock markets and a rebound in commodity stocks as a number of commodities recorded slightly higher prices.

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The movement of Indonesia's benchmark stock index (known as IHSG or Jakarta Composite Index) on today's trading day (20/01) was rather volatile. Investors returned to the market after the fall of the index was limited at the end of last week. However, China's slowing economic growth in the fourth quarter of 2013 (7.7 percent) brought negative market sentiments. Still, foreign investors were net buyers of Indonesian stocks today and in combination with an appreciating rupiah exchange rate, the index rose 0.44 percent to 4,431.57 points.

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After Bank Panin Syariah became Indonesia's first newly listed company on the Indonesia Stock Exchange (IDX) in the year 2014, it was quickly followed by four more listings in this past week. On Thursday (16/01), three new listings were conducted - Asuransi Mitra Maparya (ASMI), Bank Ina Perdana (BINA) and Capitol Nusantara Indonesia (CANI) - as well as one relisting - Tunas Alfin (TALF). The latter had delisted from the Surabaya Stock Exchange in December 2009 after the exchanges of Jakarta and Surabaya merged into the IDX.

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On Thursday's trading day (16/01), Indonesia's benchmark stock index (Jakarta Composite Index) fell victim to profit taking after two days of sharp gains (although the index did not came close to its gap at 4,393-4,398 points). The index was also pulled down due to the World Bank's pessimistic forecast for growth of Indonesia's economy as well as today's mixed Asian stock indices. Lastly, the continued Indonesia rupiah exchange rate depreciation contributed to negative market sentiments.

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Despite our concern that Indonesia's benchmark stock index (IHSG or Jakarta Composite Index) would be susceptible to profit taking after the national holiday on Tuesday (14/01) as the IHSG rose signficantly on Monday (13/01), it continued its rise on Wednesday (15/01). The IHSG was supported by positive Asian indices that were influenced by strong US and European stock markets after the release of positive economic data in the USA and Europe. The depreciating rupiah exchange rate, however, limited the IHSG's gain.

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ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the December 2013 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the current account deficit, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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Although Indonesia's benchmark stock index (Jakarta Composite Index or IHSG) ended the first trading session down, it recovered in the second half of Wednesday's trading day (08/01). Investors were eager to buy stocks that have experienced a significant correction since May 2013. Moreover, as the Indonesia Stock Exchange reduced trading sizes to 100 shares per lot from 500 shares (to increase market liquidity and attract more retail investors), investors were able to benefit from these premium prices.

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As expected, the Jakarta Composite Index (abbreviated IHSG) continued its downward trend amid falling global indices. From the start of Tuesday's trading day (07/01), the IHSG had to face pressures resulting in foreign net selling. Apart from the weakening rupiah exchange rate, negative market sentiments were caused by the Goldman Sachs Group and JP Morgan Chase & Co that both downgraded emerging market economies. This led to a correction on Asian stock markets.

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