2017, State-Owned Mining Company Stock Prices Fall More Than 10 Percent

The Indonesian government officially issued Government Regulation Number 47 of 2017 concerning the Addition of State Capital Participation in the Share Capital of PT Indonesia Asahan Aluminium (Inalum). This regulation serves as the basis for the formation of a state-owned enterprise (SOE) holding company in the mining sector. Inalum will become the parent company of three mining SOEs: PT Antam Persero Tbk (ANTM), PT Bukit Asam Persero Tbk (PTBA), and PT Timah Persero Tbk (TINS).

Throughout 2017, the share prices of government-owned mining companies experienced a decline of more than 10 percent. On November 17th, ANTM shares closed at Rp 660 per share, down 26.26 percent from Rp 895 per share on December 30th, 2016. This represents the largest decline compared to the other two state-owned enterprises (SOEs). Poor performance caused ANTM shares to fall by more than a quarter from their year-end position.

Similarly, TINS shares also fell by 18.14 percent between December 30th and November 17th, 2017, closing at Rp 880 per share, while PTBA shares also corrected by 10.4 percent to Rp 11,200 per share. Investor concerns about the prospects of SOE construction companies facing difficulties in capital expenditure for expansion impacted the shares of mining SOEs. As a result, while the Jakarta Composite Index (IHSG) of the Indonesia Stock Exchange continued to rise and hit new highs, exceeding the 6,000 level, the prices of the three mining SOE shares fell.