JAKARTA. Stock market is likely to generate dozens trillion rupiah from rights issue in an immediate time. KONTAN found, there are at least seven issuers, which are planning to issue rights worth Rp 45 trillion during the semester I-2017.

Those issuers include PT Sentul City Tbk (BKSL), PT Bumi Resources Tbk (BUMI), PT Rimo Internasional Lestari Tbk (RIMO), and PT Red Planet Indonesia Tbk (PSKT) that will issue rights worth Rp 2.32 trillion, Rp 35.1 trillion, Rp 4.1 trillion, and Rp 408.9 billion, respectively.

Analyst at NH Korindo Securities Bima Setiaji estimates that the most appropriate moment to issue rights is either in the quarter II or quarter III. The quarter I is less feasible for the rights issue, on the grounds that market would still have been affected by negative sentiments and uncertainties. “The global sentiment is still affected by the issue related the Trump’s policies. Domestically, investors still adopt wait and see on the local elections,” Bima said.

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The investors are likely to start taking a more firm position in the quarter II, after the issuance of issuers’ financial report. Therefore, the Jakarta Composite Index (JCI) would be more attractive during the first semester, with the target of 5,400-5,500.

On the other hand, bond financing will be equally rife, on the grounds that the bond funding is relatively cheaper than other sources of funding. According to Bima, issuers may get quite competitive coupon. "At the beginning of the year, BI (the Central Bank) rate would remain low so that the bonds would remain attractive for the issuers," he said.

According to the Head of Research at Yuanta Securities Kim Kwie Sjamsudin, the fund rising is expected to be more massive in the semester II-2017, especially when the condition of the stock market has been more uncertain.

Kim reminds, when the market is still consolidated, the investors are suggested to select the shares, of which the rights issue funds will be allocated for business expansion. The massive fund rising is expected to boost transactions in the stock exchange. Some issuers also set a more premium price so that the stock price can be increased.

On the other hand, rights issue may create dilution effect, as well reduce some stock valuation ratio. In this case, earning per share ratio may be dropped, as the number of circulated stocks is growing so that reducing the attractiveness of stock’s fundamentals. (Muhammad Farid/Translator)