The Indonesia Stock Exchange (IDX) authority has increased the number of stocks that can be traded on margin trading and short sales, signaling the market has started to return to its pre-October crisis level.
Starting Monday, speculators are able to buy or sell on margin up to 32 stocks, as the IDX added eight more stocks to its list of shares eligible for margin trading.
Meanwhile, the IDX increased the number of stocks eligible for short selling from 23 to 29.
A statement issued by the IDX says the eight new stocks that can be bought on margin are PT Aneka Tambang, PT Ciputra Development, PT Ciputra Property, PT Dharma Henwa, PT Bakrieland Development, PT International Nickel, PT Indosat and PT Sampoerna Agro.
While for short selling, the six new stocks are PT Aneka Tambang, PT Ciputra Development, PT Ciputra Property, Dharma Henwa, PT Bakrieland Development and PT Sampoerna Agro.
Margin trading involves transactions where investors borrow money from brokers backed by collateralized shares to buy securities, while short selling is a way of trading where investors can sell shares they borrow, with a view to buying them back again at lower prices to make a profit.
Because short selling and margin trading are considered risky, the IDX clamped down on those two types of transactions after the market crashed in October, to avoid more market volatility. Back in October, the index plunged by more than 10 percent, prompting a temporary suspension of trade.
After the October stock market crash, the IDX decided to ban short selling until January, and then cut the number of shares that could be bought or sold on margin from 30 to 24.
However, now that the market has returned to normal, the stock market authority feels confident enough to give investors the level of trading freedom they had prior to October 2008.
The Jakarta Composite Index gained 15.56 points to close at 2,338.80 on Monday's trading, rising for a third day.
The index has risen 62 percent since the beginning of this year, making it Asia's third best performing bourse.
