Over the past decade, Indonesia’s capital markets have gone from strength to strength, buoyed by the commodities super-cycle, sustained economic growth and a resilient domestic consumption story. Long dominated by foreign institutional investment, they remain vulnerable to shifts in global emerging market risk appetite. “We are still in the structural bull market that started in 2003,” Erwan Teguh, CIMB Securities’ head of research, told OBG. “Despite externally induced corrections in 2008,…
From The Report: Indonesia 2014
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Growth in Indonesia’s stock market in recent years has been driven by the steady expansion in the total number of shares listed, which increased from 296 in 2008 to 479 by September 2013. Once dominated by commodities, such as mining, energy and agriculture stocks, the local market is now led by consumer-related shares, such as financial services, infrastructure and utilities. Domestic investors’ share of trading has steadily grown in recent years, climbing from 19% in mid-2007 to 44.2% by August 2013. Encouraging new supply is critical to the bourse’s ambitions of becoming the region’s largest exchange by capitalisation by 2015, when it hopes to reach $750bn. The number of IPOs nearly doubled from 13 in 2009 to 25 in 2012, raising a total of $1bn. Despite the challenges that have been caused by global volatility, most investors have maintained a bullish long-term outlook. Indonesia’s reliance on foreign portfolio investments to finance its current account deficit is a cause for concern. All the same, its consistent growth record, resilient corporate earnings and dynamic private sector highlight its strong prospects for expansion going forward.
This chapter contains interviews with Muliaman D Hadad, Chairman, Otoritas Jasa Keuangan; and Eko Yuliantoro, CEO, Bahana Securities.