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IDX aims to double retail investors to 2.5m by 2017

The Indonesia Stock Exchange (IDX) aims to more than double the number of individual investors by 2016 or 2017, as many investors and businesspeople are optimistic about the country’s economic outlook under the leadership of the incoming administration

The Jakarta Post
Jakarta
Thu, August 21, 2014

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IDX aims to double retail investors to 2.5m by 2017

T

he Indonesia Stock Exchange (IDX) aims to more than double the number of individual investors by 2016 or 2017, as many investors and businesspeople are optimistic about the country'€™s economic outlook under the leadership of the incoming administration.

'€œThere are around 1 million retail investors investing in the capital market at present, of which about 450,000 have their funds in the stock market, while the rest are in mutual funds, retail bonds, sukuk [Islamic bonds] and unit links,'€ IDX business development director Friderica Widyasari Dewi said, citing Indonesian Central Securities Depository (KSEI) data.

'€œWe aim to increase the number of retail investors to at least 2.5 million or 1 percent of Indonesia'€™s total 250 million population. We hope to reach the figure in the next two to three years,'€ she said after a talk show to commemorate the 7th anniversary of the IDX Investor Club in Jakarta last weekend.

Indonesia will see a new administration assume power on Oct. 20, led by president-elect Joko '€œJokowi'€ Widodo, who is expected to enhance support for the country'€™s capital market, which has grown rapidly in recent years on the back of sustainable growth of the economy, companies and people'€™s purchasing power.

The domestic stock market capitalization has surged nearly fourfold, from Rp 1,076 trillion (US$91.92 million) in 2008 to Rp 5,156 trillion as of Wednesday. The number of companies that have gone public over the same period also jumped from 396 to 502. Meanwhile, the Jakarta Composite Index (JCI) has risen over the period by about 80 percent from 2,830 to 5,190.

But these achievements were only enjoyed by a few retail investors, as they accounted for less than 10 percent of the total number of capital market investors, according to KSEI data from 2012.

One way to boost the number of retail investors, according to Friderica, was to increase public awareness about the capital market. Hence, the IDX is set to launch the '€œNational Movement to Love the Capital Market'€ on Nov. 12 at the Istora Senayan in South Jakarta.

Educational programs to inform people about the ways to invest in the capital market and how to manage their funds had been conducted in a number of provinces, attracting 5,000 new single investor identities (SIDs), which were dominated by young people, she added.

'€œWe have also scrapped the Rp 30,000 terminal access fee to real-time IDX data for school and college students, as well as teachers and lecturers. Fresh investors from the education sector can open an account with only Rp 100,000'€ Friderica said.

Southeast Asia'€™s largest economy is struggling to increase financial access and literacy among its people, many of whom still live on just $2 a day on remote islands, where it can take hours or even days to get to a bank.

The Mandiri Group'€™s chief economist, Destry Damayanti, said the low number of retail investors in the country was mainly caused by a lack of knowledge about the benefits of investing in the capital market, compared to neighboring countries such as Malaysia and Thailand.

The low number of individual investors also mirrored the fact that only around 500 companies were listed on the IDX, despite there being 50 million small and medium enterprises (SMEs) and 5,000 large firms operating in the country, she added.

'€œI think the IDX should also educate SMEs about the benefits of going public, if they are ready to expand financially. Any educational program would probably be better if they were offered incentives to join the bourse,'€ she said. (gda)

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