Few investors in I'nesia
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Investors in Indonesia account for only 0.2 per cent 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 at Citibank’s 2014 capital market outlook seminar on Monday.
She added that to date the Indonesia Stock Exchange had only listed 479 companies, while Thailand only had 557 listed firms and India topped the list in Asia with 5,267 companies. She added that 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 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 sub-optimal growth in Indonesia due to a shortage of domestic investors.
She said domestic investors were still reluctant to invest in corporate bonds, derivatives and mutual funds because they perceived these instruments to have a limited market size and therefore, costly.
She added that conventional mutual funds had started enjoying growth, but it was still below optimal level.
Nurhaida said that though Indonesia’s market capitalisation had doubled from 2.09 quadrillion rupiah (Bt5.67 trillion) in 2009 to 4.36 quadrillion rupiah this year, and that average daily trading volume had increased by 1.5 times from 4.04 quadrillion rupiah in 2009 to 6.49 quadrillion rupiah in November, there were still too few domestic investors.
Nurhaida said that Indonesia needed more domestic investors to stabilise 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 organisation 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.
