Investors in Indonesia account for only 0.2 percent of the country’s total population, the lowest in the region
November 20, 2013 Leave a comment
Indonesia has fewest local investors
The Jakarta Post, Jakarta | Business | Tue, November 19 2013, 12:19 PM
Investors in Indonesia account for only 0.2 percent of the country’s total population, the lowest in the region, an executive in capital market supervision says.
“Compared to other Asian countries, Indonesia also has the lowest number of publicly listed companies,” Nurhaida, commissioner at the Financial Services Authority (OJK), said in Citibank’s 2014 capital market outlook seminar on Monday.She added that to date the Indonesia Stock Exchange had listed only 479 companies, followed by Thailand with 577 companies. She said India topped the list in Asia with 5,267 companies. She said the lack of domestic investors left Indonesia vulnerable to negative sentiments among foreign investors.
Citibank Indonesia chief country officer Tigor Siahaan echoed Nurhaida’s statements, saying that the country’s capital markets were affected by the uncertainty in the global economy.
“For example, our markets are going to be affected by the Federal Reserve’s tapering of its quantitative easing policy next year, which may disrupt the economy, including credit growth,” he said.
According to Nurhaida, corporate bonds, derivatives and mutual funds still experienced suboptimal growth in Indonesia due to a shortage of domestic investors.
She said that domestic investors were still reluctant to invest in corporate bonds, derivatives and mutual funds because they perceived the instruments to have a limited market size and therefore, costly.
She added that conventional mutual funds had started to enjoy growth, but its level was still below optimal level.
Nurhaida said that although Indonesia’s market capitalization had doubled from Rp 2.09 quadrillion (US$ 179.75 billion) in 2009 to Rp 4.36 quadrillion in Nov. 2013 and average daily trading volume had increased by 1.5 times from Rp 4.04 quadrillion in 2009 to Rp 6.49 quadrillion in Nov. 2013, there were still too few domestic investors.
Nurhaida said that Indonesia needed more domestic investors to stabilize its capital markets.
“A sufficient number of domestic investors would act as a solid buffer for Indonesia’s capital markets when foreign portfolio investors feel obliged to, for example, move their funds out of the country,”
she said.
Nurhaida said her organization was preparing a draft regulation to allow pawn, insurance, financial services and pension firms to become agents for mutual funds to attract more domestic investors.
“We will inform the public once we have finished the regulation,” she said. (ogi)
About bambooinnovator
Bamboo Innovator 