Stock Market Slump and Weak IPOs: What’s Next for Investors?

99 Tekno JAKARTA. The Indonesian stock market is experiencing a significant slowdown as mid-2026 approaches. The Jakarta Composite Index (IHSG) has seen a deep correction, and the trend for Initial Public Offerings (IPOs) has been notably quiet this year.

According to data from the Indonesia Stock Exchange (BEI), as of May 22, 2026, only one issuer has conducted an IPO so far this year: PT BSA Logistics Indonesia Tbk (WBSA), which successfully raised Rp 0.30 trillion. Despite the slow start, the BEI has consistently reaffirmed its ambitious target of 50 IPOs for the year 2026. Currently, there are 15 companies in the BEI’s listing pipeline, comprising 4 medium-scale asset companies and 11 large-scale asset companies.

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This sluggish IPO trend marks a decline observed over at least the last three years. In 2025, there were 26 issuers listed on the BEI. This was preceded by 41 new companies listing in 2024, a significant drop from the 79 new issuers recorded in 2023. This downward trajectory highlights growing concerns within the capital market.

Parto Karwito, President Director of Infovesta Utama, attributed the decline in IPO trends in 2025 to several factors, including MSCI valuation considerations, ongoing geopolitical conflicts, and broader macroeconomic conditions. He also noted that regulators, namely the BEI and the Financial Services Authority (OJK), have tightened IPO requirements, even without formal changes to the regulations. “These conditions mean investors are limited to investing in a secondary market that has already seen a decline, thus restricting their options,” he explained to Kontan on Friday, May 29, 2026.

Rully Arya Wisnubroto, Head of Research & Chief Economist at PT Mirae Asset Sekuritas Indonesia, viewed the subdued IPO activity in 2026 as a reflection of a market that has become far more selective. Investors are now scrutinizing valuations, fundamental quality, and free float structures more rigorously. This, he suggested, does not indicate a complete loss of interest in funding through the exchange. “So, compared to last year, the main problem now isn’t just the number of potential issuers, but a mismatch between sellers’ valuation expectations and investors’ increasingly cautious appetite in the secondary market,” he told Kontan.

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Echoing these sentiments, Capital Market Observer and Director of PT Purwanto Asset Management, Edwin Sebayang, believes that the quiet IPO market is not simply due to companies being unwilling to list. Instead, he attributes it to a complex interplay of market conditions, evolving investor behavior, and a comprehensive re-evaluation of the quality of issuers that have entered the exchange in recent years. This stems from more selective investors, recent disappointing IPO performances, less-than-ideal global and domestic market conditions, and a general decline in private market valuations. Previously, many startups and growing companies hoped an IPO would serve as a ‘liquidity event’ with a premium valuation. However, public investors are no longer willing to pay high prices merely for a “narrative,” leading to a significant reduction in IPO valuations. “As a result, many companies are choosing to postpone their listings rather than conduct an IPO at a low valuation,” he told Kontan on Friday, May 29, 2026.

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Reports of companies like RANS Entertainment and Taman Safari planning IPOs in 2026 were expected to inject enthusiasm into the Indonesian stock market. However, experts believe that even well-known names alone are insufficient to significantly boost market performance. “These are interesting from a story and public appeal perspective, but that isn’t enough to automatically make them attractive investments,” Rully stated. Edwin added that if these IPOs do materialize, both issuers have the potential for high appeal due to strong brand awareness, significant consumer engagement, and domestic narratives easily understood by retail investors.

For RANS Entertainment, an IPO would likely revolve around a narrative of media, entertainment ecosystems, the creator economy, lifestyle, and consumer platforms. While such a corporate action might generate considerable buzz, the primary challenges for a celebrity-driven media business include sustainability, monetization, and reliance on public figures. Institutional investors, conversely, typically focus intently on recurring revenue, EBITDA quality, cash flow, and scalability. “So, whether it’s attractive or not will depend heavily on the valuation. If it’s too expensive simply because of a big name, the risk of a RANS IPO is high,” he commented.

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Meanwhile, Taman Safari could offer compelling fundamentals if its financial statements are healthy, cash flow is stable, occupancy and visitor growth are strong, and expansion plans are clear. The main challenges for the leisure and tourism business are tangible assets, recurring visitors, pricing power, and a sufficiently strong brand moat. “Moreover, Indonesia’s domestic consumption remains robust. If its valuation is reasonable, Taman Safari has the potential to be more attractive for long-term investors than a hype-driven IPO,” he explained.

Declining IPO Quality

Rully observed that the quality of IPOs on the BEI in recent years shows a pattern where many IPO stocks perform strongly only in the initial phase, then weaken once the euphoria subsides. According to Parto, IPO stocks tend to be more suitable for short-term investments. This is primarily because the free float of IPO issuers is often small, allowing prices to rise in the early days to attract more investor interest. For illustration, Infovesta’s calculations show that, excluding PT DCI Indonesia Tbk (DCII) due to its anomalous returns, the average one-year return for all IPO stocks over the last five years was 31.19%. However, in the long term, major shareholders often seek to realize their holdings at high prices, selling off their shares and leading to a decline in the IPO issuer’s stock price. “The nature of retail investors also supports short-term investment practices, as money is typically rotated into other IPO stocks or the secondary market,” he added.

The current IPO system and process are generally considered good, though implementation and oversight still lag. Issues include transparency in allocation, the use of nominee investors (borrowing names), and unrecorded crossing transactions during IPOs. “The impact is low free float, which eventually led to MSCI imposing sanctions,” he elaborated. Edwin noted that the majority of IPOs in recent years have been more appealing for momentum trading than long-term investing. This is because recent IPO companies often exhibit characteristics such as small free float, thin liquidity, concentrated ownership, aggressive valuations, and unstable profitability. “As a result, prices are easily manipulated or ‘fried.’ Investors are now also starting to differentiate between ‘trading IPOs’ and ‘investing IPOs’,” he stated.

IPOs with the potential to generate positive sentiment in the domestic stock market are those from “lighthouse” companies. The market yearns for IPOs that can enhance index quality, boost liquidity, and attract foreign inflows. Therefore, the BEI and OJK, in collaboration with securities firms, must intensify IPO socialization efforts, extending to regional areas, and facilitate corporate actions with intensive guidance.

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Parto urged the BEI to enhance transparency and diligently monitor stock allocation to investors, free float levels, nominee accounts, financial statements, and prospects. Additionally, he recommended targeting industries that are still underrepresented in Indonesia for IPOs, such as AI, IT, Data Centers, biotech, waste processing, and rare earth metal mining. “There’s no need to overly pursue the target of 50 new issuers in 2026. The exchange must conduct thorough due diligence, tighten audits, and even carry out surprise visits,” he emphasized. Rully advised the BEI to prioritize ensuring the quality of new issuers over merely chasing quantity this year. Realistically, achieving the 2026 IPO target will depend on market stability in the second half of the year and the willingness of prospective issuers to lower their valuation expectations. Investors, too, are advised to meticulously examine the valuation of IPO companies compared to peers in the same industry, the quality of earnings, cash flow, debt levels, free float proportion, lock-up periods, and the intended use of IPO proceeds. “In current market conditions, investors should not buy IPOs solely based on a grand narrative or name popularity, but must assess whether the business truly warrants a premium valuation and if post-listing liquidity is healthy enough,” he cautioned.

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Edwin believes the BEI needs to tighten issuer quality standards, enlarge free float, critically evaluate IPO valuations, and increase institutional investor participation. If the BEI prioritizes quantity, the reputation risk for the capital market and its regulators could further deteriorate. “For investors, sometimes the best IPO stocks are actually bought 6-12 months after listing, once the euphoria has subsided and valuations become more rational,” he concluded.