Steep Rise in Daily Average Transactions On Bourse


By Elizabeth Gloria Brahmana on 12:33 pm May 16, 2013.

Singapore. The daily transaction average on the Indonesia Stock Exchange has increased by 43 percent so far this year, exceeding the bourse’s own target on the back of strong fund inflows from foreign investors keen to capitalize on Indonesian growth.

“The Indonesia stock market offers huge returns compared to other stock markets,” the development director of the Indonesia Stock Exchange (BEI), Friderica Widyasari Dewi, said at the opening of the Indonesia Investment Forum on Wednesday.

The daily transaction average was at Rp 6.48 trillion ($665 million) on Wednesday compared with Rp 4.95 trillion at the end of last year, according to data from the bourse.

That figure is higher than the exchange’s target of Rp 5.5 trillion for this year.

Foreign investors have invested Rp 24 trillion so far this year, already exceeding the total figure for last year of Rp 15.9 trillion, according to the bourse.

Friderica said the Indonesia Stock Exchange could grow at a faster pace this year, commensurate with the country’s economic progress.

“There are projections that say, within the next 30 years, Indonesia will be among world’s strongest economies. The market will be more powerful and the room to grow is still huge,” she said.

Total combined market capitalization of more than 450 listed companies in the local bourse was valued at around Rp 4,961 trillion, almost equivalent to half of the country’s GDP.

The market capitalization of indices in neighbors Malaysia and Singapore has already exceeded their respective GDP totals.

In the next 15 years, there will be a surge of domestic investors in line with a growing middle class seeking new instruments in which to invest their excess income.

“The population, while still around 240 million people, is estimated to increase to 280 million by 2030. The number of people [classified as] middle class will be around 170 million people,” Friderica said.

GDP per capita in Indonesia over the last 10 years has more than tripled to $3,563 in 2012, from $925 in 2002.

“Currently, the number of investors in the BEI are still about 100,000, so the potential for the growth of capital markets is still very large,” she said.

To that end, BEI has expanded its marketing program in order to boost the number of investors.

To ensure the number of stockholders continues to rise, the management of the Indonesian bourse has been working with 30 of the country’s universities and it will open an office in Sumba, East Nusa Tenggara province on May 30, to attract investors from the island.

Apart from marketing to potential investors, the IDX has also has conducted a study of 3,000 companies are eligible for making inital public offerings.

With more companies seeking to raise funds via flotations and rights issues, the market capitalization of the local bourse will continue to rise, Frederica said.

“There are approximately 3,000 companies highly eligible to enter the market,” she added.

From a BEI survey of 100 companies in Indonesia that have so far elected not to list, as many as 70 percent of them claimed to be interested in the capital market in Indonesia.

“Because of that, we are now trying to reach out to companies that are interested to realize their intentions,” she said.