(JAKARTA) Shares in Indonesian property firm PT Ciputra Property Tbk plunged nearly 13 per cent on their debut yesterday, wiping out early gains, as investors feared interest rates might have reached bottom, dampening demand for new homes.

The stock hit an intraday low of 600 rupiah, compared to an initial public offering (IPO) price of 700 rupiah, before ending the session around 610 rupiah in a broader market that gained 1.2 per cent.

The stock had risen to a high of 750 rupiah at the opening.

Ciputra Property raised 2.11 trillion rupiah (S$336 million) by offering around 3 billion of its shares, with the proceeds earmarked to acquire a number of companies and fund new projects.

At its IPO price, Ciputra Property was valued at US$472.8 million, making it the sixth-largest property company by market capitalisation on the Jakarta bourse.

Investors grew cautious on interest-rate-sensitive stocks after Indonesia’s central bank on Tuesday left its key interest rate unchanged at 8.25 per cent for the fourth month in a row, wary that surging oil prices could spur inflation.

The central bank cut its benchmark rate from 12.75 per cent in early 2006 to 8.25 per cent earlier this year, supporting growth in the Indonesian housing and property sector.

‘Valuation-wise, it’s expensive. People are cutting their losses and moving to more attractive sectors such as commodities. Banking sectors and shares which are sensitive to interest rates like properties are going down today,’ one trader at a foreign brokerage house said.

Other firms in the Ciputra Group also succumbed to selling pressure, with Ciputra Development Tbk falling around 8 per cent and Ciputra Surya Tbk dropping about 2 per cent.

But the poor first-day showing did not worry the company, which said it expected a stronger performance in 2008 to help its shares.

Candra Ciputra, president director of Ciputra Property, said he expected sales to soar to 840 billion rupiah in 2008 from a forecast 278 billion this year, with net profit climbing to 230 billion rupiah next year from a forecast 48 billion rupiah in 2007.

‘The improvement will be supported by a higher number of property sales next year, with more properties being constructed,’ Mr Candra Ciputra told reporters. ‘I’m still confident with the current price. I believe in no time it can return to the IPO price or even reach 800.’

Indonesian companies have raised more than US$3 billion so far this year in IPOs and follow-on equity sales, according to Thomson Financial, marking a record for Jakarta’s stock market. — Reuters

Source: Business Times