HSBC’s Indonesia unit is considering filing an IPO to tap into a hefty investor market in the world’s fourth-most populous country, according to anonymous sources familiar with the plan.
Indonesia’s economy has been relatively unharmed by recent COVID waves, and the government is predicting economic growth of up to 5.5% this year; for reference, the US is expected to grow somewhere between 2% and 2.5% this year.
This move is part of a bigger change HSBC is making in Asia, with it selling off and scaling back unprofitable businesses in other regions while pumping money into new investments it sees as better bets.
Indonesia’s market is a top performer in Southeast Asia. While it’s slumped a bit since its highest levels in mid-March, it’s still up almost 5% this year. That may be why Indonesia has seen some of the highest-profile listings in the region this year.
Indonesia benefits from “a number of factors that include reopening-related optimism in the region as well as support from a deepening base of domestic investors in each country,” said Vijay Vaidyanathan, Morgan Stanley’s head of global capital markets in Southeast Asia.
According to Herald van der Linde, the head of Asia equity strategy at HSBC, countries like Indonesia that usually see this kind of growth have high exposure to both commodities and banks. “Indonesia’s got both of them,” he said.