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Retail investors boom as brokerages push campaign
The low participation of individuals in Indonesia’s stock market leaves much potential to be tapped by securities companies operating in the country, so much so that they are tailoring their business strategies toward luring local individuals
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The low participation of individuals in Indonesia’s stock market leaves much potential to be tapped by securities companies operating in the country, so much so that they are tailoring their business strategies toward luring local individuals.
The number of retail equity investors registered at the Indonesian Central Securities Depository (KSEI) has more than tripled from 279,555 in 2012 to 993,229 as of Aug. 5. Despite the rapid increase, still fewer than 1 percent of Indonesia’s population are individual investors, which compares to 26 percent in Singapore and 7.8 percent in Malaysia.
This, however, is a blessing in disguise for securities companies that see this low individual stock market penetration as a business opportunity. They are now targeting people who have little to zero knowledge about stock investment and small investment amounts.
To lure people into open accounts before they can invest in the stock market, securities companies have begun to change their business strategy by creating social media content targeting individual investors, approaching online and offline communities and organizing events with public figures.
“Since last year, we have been bringing our online campaigns offline to include a human touch in today’s digital era,” said Bernadus Wijaya, vice president of retail and business development at Sucor Sekuritas, which has organized multiple offline events to beat the drum for capital market investment.
The securities company would sometimes invite public figures like YouTube celebrity Kevin Hendrawan or investment mentor Ellen May to those events to educate would-be investors before they dip their feet into the stock market, Bernadus explained.
For Sucor Sekuritas, the strategy produced more than 2,000 new account openings last year. The brokerage’s number of retail investors reached has 13,005 clients as of July 31, almost six times the number of its institutional investors.
Another strategy is to approach local communities to educate first-time equity investors, which securities firm PT MNC Sekuritas has been doing for the past several years.
MNC Sekuritas launched a new product that allows first-time investors to open an account with just Rp 100,000 (US$7.04) and encourage them to buy stocks periodically to grow their portfolio.
The product, called “Gemesin”, was launched in 2017 and resembles Indonesia Stock Exchange’s (IDX) Yuk Nabung Saham (Let’s Invest in Stocks) campaign that kicked off in 2015, encouraging investors to buy shares with a Rp 100,000 top-up every month.
The IDX has also rolled out new policies to get people with limited funds to invest in shares as well as promote financial inclusion in the country. One of the policies is the introduction of a new lot-sizing mechanism that enables investors to buy fewer shares in one transaction by reducing the number of shares in one lot to 100 shares from 500 shares in 2013.
These efforts have proven fruitful for MNC Sekuritas.
“[The number of] our retail clients has almost reached 70,000, way more than our institutional clients numbering 1,500,” said MNC Sekuritas president director Susy Meilina.
Even though MNC Sekuritas’ brokerage commission income fell by 25.87 percent year-on-year (yoy) in the first half of this year, Susy said she was upbeat that transactions from retail clients would at least maintain the firm’s positive financial performance, as they tended to be unaffected by market fluctuations.
“We hope that retail transactions will dominate the market in the future and make our stock market more stable,” she added.
For Sucor Sekuritas, the increase in retail investors helped raise revenue from brokerage commissions by 41 percent yoy to Rp 18 billion in the first half of this year.
“This increase happened even after we lowered our share sales and purchase transaction fees,” said Bernadus, attributing the increase to a 30 percent jump in the number of active clients.
