A report by Ernst & Young stated, the global IPO market is heading to a bad turn in 2023, by Q1 it represented about 299 IPOs worth US$ 21.5 billion (IDR 315.6 trillion) or 8% decrease in the number of IPOs, and 61% drop in amount raised year-on-year (YoY).
The reported trend stated the number of IPOs in Asia Pacific went on the decline of 6% while proceeds plummeted to about 70% from a year ago.
The reports show a potential bright spot in IPO activity in the Southeast Asia region to be very encouraging, with Indonesia as the most active country in Q1, having about 30 IPOs worth US$ 828 million.
The report demonstrates the decrease in IPO activity due to several factors such as rising interest rates, a moderate stock market, entrenched inflation, and a turbulent global banking industry.
Globally, tech firms have been the mainstay of IPO activity in recent years, but saw a sharp downturn in valuations; crypto markets, and the global banking industry saw markets going down; listing volume through special purpose acquisition (SPAC) also saw companies hitting six-year low.
Albeit, the challenges, the IPO continues to grow, and shed light on recovery if inflation peaks, energy prices soften, collaboration between government & investors could lead to double listing & cross-border deals in 2023, and a rebound in Mainland China’s economy could also help.
Bright spot in Indonesian IPO, experts in IPO phenomenon, and trends in investing
Indonesia, as one of the most potential IPO listings saw a number of IPOs in March, and in early April in the energy, primary consumer goods, non-primary consumer goods, health, infrastructure, raw materials, technology, property, transportation & logistics, and industrial sectors; about 8 new IPOs in 2023 worth IDR 2.26 trillion.
According to Adrianus Bias, Head of Research at Sucor Sekuritas, the high IPO was caused by a track record of liquidity and volatility. “IPO shares are interesting because they have just been listed on the stock exchange, and there is no track record for liquidity or volatility. Fundamentally, we can study business prospects and performance, but there is no track record, it could be very volatile,” said Bias, to Investime CNBC Indonesia on August 29, 2021.
As reported by investasi.kontan.co.id, IDX is targeting as many as 57 new companies for IPO. As of April 2023, 17 companies have gone public.
Teguh Hidayat, Director of Avere Investama & a capital market observer, admits that he does not agree with the number of companies conducting IPOs. “I don’t agree that there are so many IPOs because on average the companies are not good enough,” said Teguh.
In addition, Parto Kawito, Director of Infovesta Utama, said that it was difficult to predict the movements of the IPO shares. “In addition, the allotment is not transparent, even though there is a report from the underwriter to the Financial Services Authority (OJK), in fact the stock performance on the listing day does not reflect the conditions at the time of the IPO,” said Kawito on February 8, 2023.
In addition, Kawito advises investors to study the company’s fundamentals, examine the prospects of the industry and the company, as well as the track record of its underwriters.
Currently, in Indonesia the trend of buying shares is increasing rapidly with the facilitation of applications that make it easy and safe to buy bonds and money market shares. In addition, the increase in digitization among Indonesian people.
The emergence of various supporting applications such as Bibit, Ajaib, and others. In fact, e-commerce applications such as Tokopedia, Shopee, Bukalapak, and others open a stock purchase menu.