Analysis: Odd price movements and Haji Isam’s rumored Bayan acquisition

On August 15, three influential businessmen, including tycoon Haji Isam, owner of PT Bayan Resources and defense entrepreneur Norman Joesoef, toured a site in Kutai Kartanegara, East Kalimantan to assess potential mining locations. Rumors quickly spread that Haji Isam was interested in acquiring a 62% stake in Bayan Resources, causing a surge in the shares of companies linked to Haji Isam and Bayan Resources. The shares of Bayan Resources rose by 19.97% to Rp 17,125 (96 US cents) per share on August 18.

However, just two days later, on August 19, speculation proved false when Bayan Resources and Haji Isam's palm oil company, PT Jhonlin Agro Raya, denied involvement in the deal. The shares of Bayan Resources then plummeted by 14.9% to Rp 14,700 at the beginning of trading.

The peculiar aspect of this event was the shared movement of share prices among Haji Isam-linked companies, unlike the typical pattern where the acquiring company's shares fall and the target's rise. PT Dana Brata Luhur, a coal logistics company associated with Haji Isam, saw a 21.09% increase in share price to Rp 1,665 on August 18, while unrelated companies such as fast-food operator PT Fast Food Indonesia, palm oil company Jhonlin Agro Raya, and nickel mining company PT Abadi Nusantara Hijau Investama also experienced significant gains on the same day.

Investors may have anticipated synergies between Haji Isam's businesses and Bayan Resources, as Bayan Resources operates in coal mining, while Dana Brata Luhur is involved in coal logistics and distribution. However, this explanation does not account for the rally in shares of Haji Isam's companies operating in unrelated sectors like fast food, palm oil, and nickel. The answer may lie in the highly concentrated ownership structures prevalent in Indonesia’s capital market.