Indonesian Stock Exchange "Cleaning Up", Cheap Stocks on Watch

InvestorCrypto.net - The Indonesia Stock Exchange (IDX) has implemented the second phase of a special monitoring board called full periodic call auction starting on Monday (25/3/2024). 

This special monitoring board is a listing board for listed companies that meet certain criteria set by the IDX. The implementation of the full periodic call auction special monitoring board is a follow-up from the first phase, which was the hybrid call auction implemented since June 12, 2023.

In an official statement from the Indonesia Stock Exchange (IDX), it is explained that with the implementation of full periodic call auction, all shares listed on the special monitoring board are traded through five sessions of periodic call auction throughout the day. 

There are 11 criteria for stocks to be listed on the special monitoring board, including:

1. The average stock price over the past 6 months in the regular market and/or the regular periodic call auction market is less than Rp 51.00.

2. The latest audited financial report received a disclaimer opinion.

3. There is no recorded income or changes in income on the latest audited financial report or interim financial report compared to previous financial reports.

4. Mining companies that have not generated income from their core business until the 4th year since listing on the IDX.

5. Negative equity in the most recent financial report.

6. Failure to meet the requirements for remaining listed on the IDX as regulated by Regulation No. I-A and I-V (public float).

7. Low liquidity, with daily average transaction value of less than Rp 5,000,000.00 and daily average transaction volume of less than 10,000 shares in the past 6 months in the regular market and/or the regular periodic call auction market.

8. Companies facing deferred debt payment obligations (PKPU), bankruptcy, or settlement cancellation.

9. Subsidiaries with material revenue contribution under PKPU, bankruptcy, or settlement cancellation.

10. Been subject to temporary suspension of trading for more than 1 day due to trading activities.

11. Other conditions set by the IDX after obtaining approval or orders from the Financial Services Authority (OJK).

Beforehand, the Director of Development at the IDX, Jeffrey Hendrik, explained that in the full call auction stage, shares on the special monitoring board can be traded at a minimum price of Rp 1. 

Auto-rejection for shares priced between Rp 1-10 is set at Rp 1, while for shares priced above Rp 10, it is 10%.

Therefore, shares listed on the special monitoring board under the full call auction will have a minimum price of Rp 1 instead of Rp 50, with auto-rejection as previously mentioned. 

Market observations on the trading day of March 25 revealed several stocks that were initially 'gocap' but decreased in price. For example, BKSL dropped to Rp 47, HOPE to Rp 46, TAXI to Rp 45, ZATA to Rp 45, IPPE to Rp 45, among others.

The trading mechanism for equity products on the special monitoring board uses periodic call auction. In this mechanism, orders are collected during the order collecting phase until the random closing phase, followed by matching during the order matching phase at the end of the session.

Jeffrey stated that the special monitoring board can provide alternative segmentation of listing boards more in line with investor investment strategies and offer transparency on company conditions. 

The special monitoring board is also expected to increase transactions and trading liquidity, especially for low-frequency stocks priced at Rp 50, with special trading mechanisms to minimize abnormal price formation and ensure a more appropriate price discovery process for low liquidity stocks.

In conclusion, the implementation of the special monitoring board, particularly the full periodic call auction phase, aims to enhance market transparency, improve trading liquidity, and facilitate fair price discovery. This initiative is set to benefit investors by providing a structured platform for trading low-liquidity stocks and preventing abnormal market behaviors.