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Hey this is very interesting and a pretty thorough round up,,,BUT, I don't get your exchange rate to the ASX listed stock. With the present exchange rate the stock should be 2,700 IDR = 0.28 AUD not 1.40 or whatever you were quoting, can you clarify please.
Hey pocket, the shares on issue on the ASX and IDX are different (as with the market cap), so it would be incorrect to just do a simple currency conversion on the stock (or target) price. Separate calculations are required to arrive at a price that would reflect a similar (same) market cap or valuation for the stock.
They don't act independently, they are all part of total market Cap, it's the same company on two exchanges. To say this company is worth AUD$1.5M and returns AUD$0.01/Share for the size of the company and its profits, regardless of 70% gov owned is incorrect. Why would I pay 5-10 times the price on the ASX when I can get it at the normal price on the IDX. Most of us have shares in companies that are listed on other exchanges, what makes this different.
quote "Considering exchange rates and other complications, stock prices should remain the same on both exchanges. If not, an arbiter will bring them together."
You are correct in that a dual-listed company is essentially the same company listed on two different exchanges, but as discussed, the shares on each exchange are typically not equal in terms of the no. of shares outstanding and market cap, which is the case here. Thus, a straight currency conversion of the stock price is not going to accurately reflect the actual market value of the stock on each exchange. The stock price alone does not reflect the overall value of a company. Changes in the no. of shares outstanding can impact the market cap even when the stock price remains the same. Thus, when evaluating a company's worth, it is important to consider both market cap and stock price (and not just the latter).
With regards to arbitraging, we should typically see convergence. At the same time, it is possible that the price on one exchange remain consistently higher than the other (seems to be the case for the ASX). There can be multiple reasons for that. In the presentation, we briefly touched upon liquidity differences in the two exchanges, but could also be other market, regulatory or structural-related factors. We'd prefer exposure directly via the IDX for that matter and it's quite straight forward to get set up. Hope that helps better clarify.
Interesting stock and they have the Aussie listing... I will include your post in my Monday "Emerging Market Links + The Week Ahead" post...
Hey this is very interesting and a pretty thorough round up,,,BUT, I don't get your exchange rate to the ASX listed stock. With the present exchange rate the stock should be 2,700 IDR = 0.28 AUD not 1.40 or whatever you were quoting, can you clarify please.
Hey pocket, the shares on issue on the ASX and IDX are different (as with the market cap), so it would be incorrect to just do a simple currency conversion on the stock (or target) price. Separate calculations are required to arrive at a price that would reflect a similar (same) market cap or valuation for the stock.
They don't act independently, they are all part of total market Cap, it's the same company on two exchanges. To say this company is worth AUD$1.5M and returns AUD$0.01/Share for the size of the company and its profits, regardless of 70% gov owned is incorrect. Why would I pay 5-10 times the price on the ASX when I can get it at the normal price on the IDX. Most of us have shares in companies that are listed on other exchanges, what makes this different.
quote "Considering exchange rates and other complications, stock prices should remain the same on both exchanges. If not, an arbiter will bring them together."
You are correct in that a dual-listed company is essentially the same company listed on two different exchanges, but as discussed, the shares on each exchange are typically not equal in terms of the no. of shares outstanding and market cap, which is the case here. Thus, a straight currency conversion of the stock price is not going to accurately reflect the actual market value of the stock on each exchange. The stock price alone does not reflect the overall value of a company. Changes in the no. of shares outstanding can impact the market cap even when the stock price remains the same. Thus, when evaluating a company's worth, it is important to consider both market cap and stock price (and not just the latter).
With regards to arbitraging, we should typically see convergence. At the same time, it is possible that the price on one exchange remain consistently higher than the other (seems to be the case for the ASX). There can be multiple reasons for that. In the presentation, we briefly touched upon liquidity differences in the two exchanges, but could also be other market, regulatory or structural-related factors. We'd prefer exposure directly via the IDX for that matter and it's quite straight forward to get set up. Hope that helps better clarify.