For anyone wanting to know what has happened to the Indonesian capital market in 2009,
the flashy and lavish opening of the fourth Investor Summit and Capital Market Expo in early December gives you the best description to sum up the state of the market, one year after the catastrophe in 2008.
Optimistic spirits warmed this year’s event with a group of dancers opening the exhibition followed by enthusiastic applause from the audience, who were mostly investors, with big smiles on their faces.
Such sentiments are in stark contrast to what happened a year earlier, when the event was held one month after the market crashed and the index had dropped to its lowest point.
This year, investors have all the reasons to smile, as the market has recovered to a level that is better than expected.
By comparison, last year the index plunged by 52 percent following the global financial market meltdown originating in the US and Europe, creating a massive negative cascade effect hitting emerging country markets. However, this year, the index has risen more than 80 percent as of Dec. 2, for Asia’s second best performing stock market.
Analysts believe that the massive revival of the local capital market was mostly because of the resilience of the Indonesian economy despite the global financial downturn, so that Indonesia managed to still attract investors to put their money here in the hopes of getting higher yields.
Indonesia is among only a few countries along with China and India that managed to survive the global economic turbulence while still recording positive growth, because its economy is less dependent on foreign direct investment, relying more on its consumer-driven economy.
The Indonesian economy is still expected to grow by 4.3 percent this year, even though the figure is less than the 6.1 percent recorded in 2008. This is among the best results in the world, with many other economies still predicted to face contraction.
These circumstances prompted some foreign investors to fall in love with Indonesia, said stock market analyst Rizal B. Prasetijo.
“Positive growth in the economy combined with the smooth election process have increased the appetite of investors for local assets, including equities,” he said.
Rizal pointed out the country’s post-election political stability was one of Indonesia’s main positive features for investors compared to neighboring countries, like Thailand, The Philippines and Malaysia also seemed to fail to provide the political certainty sought by investors.
Based on the latest data from the Indonesian Central Securities Depository (KSEI), the value of share ownership held by foreign investors increased 85 percent from Rp 404.5 trillion (US$42.8 billion) to Rp 748.7 trillion in November 2009, accounting for 70 percent of the value of shares listed at the KSEI.
Aviyasa Dwipayana of Trimegah Securities shared this view, saying the country’s strong fundamentals had made investors feel confident toward the local market.
Even the recent Dubai market bailout, which some feared might prompt a second global financial crisis, failed to dent investors’ confidence in the Indonesian market, which seems not to have be affected by bad news from the Middle East.
The index kept climbing beyond 2,500 points even after state-owned holding firm Dubai World announced its delay on repayments on billions of dollars of debt, creating knock-on effects on US and European markets.
According to the data from the Indonesia Stock Exchange (IDX), the index for mining companies showed a significant increase of 119 percent throughout the year as of the end of November, while the banking sector followed with a 67-percent jump.
These conditions attracted new investors, even including local ones, to enter the capital market, now seen as an alternative investment to gain higher yields, Aviyasa said.
“These so-called retail investors have made trading activities become more active and in the end contributed to the increased index,” he said, referring to investor newbies, who entered the market when it reached its lowest point in the hopes of getting shares at the lowest prices.
Thanks to these investors, the daily transaction value increased to the level of almost Rp 4 trillion in early December, double the Rp 2 trillion recorded earlier this year.
Market capitalization also increased significantly from Rp 1,131 trillion at the beginning of this year to about Rp 1,900 trillion in December.
This robust growth in the local capital market industry is expected to attract more companies to go public as the higher return will make it as the favorable place for fund raising.
The writer is a journalist at The Jakarta Post.
| 
|
|
|
|
|
|
|