Capital Markets
From The Report: Indonesia 2019
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Indonesia’s capital markets have been on a steady growth path in recent years, with market capitalisation and trading activity showing strong expansion since 2012. Meanwhile, the number of initial public offerings (IPOs) on the Indonesia Stock Exchange (IDX) reached a 26-year high in 2018. Debt markets have been resilient despite widespread global volatility, which prompted significant outflows from emerging markets that year. Nonetheless, some challenges remain for stakeholders: factors such as illiquidity, potential election shocks and stringent regulatory requirements continue to weigh on domestic companies’ market participation. The authorities are seeking to encourage more IPOs and boost broader market liquidity, although regulatory challenges and elevated listing fees continue to impede progress.A planned small and medium-sized enterprise board has yet to be established. New regulations surrounding cryptocurrency trading could also affect plans to diversify IDX product offerings, even as reforms help the sector maintain its upward trajectory in 2019. This chapter also contains an interview with Inarno Djajadi, President Director, Indonesia Stock Exchange.

Articles from this Chapter

Overview

Upwards trajectory: Capital market activity is set to increase, with efforts to encourage new listings and greater liquidity
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Indonesia’s capital markets have been on a steady growth path in recent years, with market capitalisation and trading activity showing strong expansion since 2012, while the number of initial public offerings (IPOs) on the Indonesia Stock Exchange (IDX) reached a 26-year high in 2018. Debt markets have been resilient despite widespread global volatility, which prompted significant outflows from emerging markets that year. Nonetheless, some challenges remain for stakeholders; factors such…

Interview

Strong and solid: Inarno Djajadi, President Director, Indonesia Stock Exchange (IDX), on boosting privatisation and transparency
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Interview:Inarno Djajadi How would you evaluate the performance of the capital markets during 2018? INARNO DJAJADI: Indonesia’s economy is quite stable. GDP growth was above 5% in 2018, while the inflation rate was around 3.5% and the interest rate was at 6%. Indonesia also boasts solid investment grades from credit rating agencies Fitch, Standard & Poor’s, and Moody’s, which is quite remarkable. Our goal is to increase the financial literacy and inclusion of the Indonesian people…

Analysis

Unleash the dragon: Rupiah-denominated bonds provide attractive alternative financing options for public sector firms
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With Indonesia experiencing an infrastructure deficit of $1.5trn according to the World Bank, state-owned enterprises (SOEs) increasingly rely on debt to finance investment. Therefore, some SOEs have opted to issue rupiah-denominated bonds – known as Komodo bonds – on offshore exchanges, to not only raise capital for projects, but also to mitigate foreign exchange risks. High Demand Toll road operator Jasa Marga emerged as the first SOE to issue a rupiah-denominated bond on the London…

Overview

Indexed growth: Inclusion in global indices often results in a greater flow of funds to capital markets, but it is just one aspect of the economic picture
OBG
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The period of easily raising funds from abroad seems to be coming to an end for emerging markets around the world. In the new environment of higher interest rates in the US and increased competition for capital flows, portfolio managers are becoming more selective with where they place their money. One way for developing nations to ensure that their financial markets can continue to attract foreign funds and remain sustainably liquid is by being included in visible and well-regarded benchmark indices. In addition to drawing in fund managers, inclusion on such indices requires specific standards that indicate to investors that the participating…

Overview

Indexed growth: Inclusion in global indices often results in a greater flow of funds to capital markets, but it is just one aspect of the economic picture
OBG
plus

The period of easily raising funds from abroad seems to be coming to an end for emerging markets around the world. In the new environment of higher interest rates in the US and increased competition for capital flows, portfolio managers are becoming more selective with where they place their money. One way for developing nations to ensure that their financial markets can continue to attract foreign funds and remain sustainably liquid is by being included in visible and well-regarded benchmark indices. In addition to drawing in fund managers, inclusion on such indices requires specific standards that indicate to investors that the participating…