Foreign investors dominate Indonesia stock market

Ika Krismantari, The Jakarta Post,  Jakarta | Fri, 01/02/2009 10:29 AM  

Foreign businesses were still keen to invest in Indonesian stocks last year, shrugging off worries about the future of the bourse. 

A year-end report from the Indonesia Central Securities Depository (KSEI) reveals that foreign investors accounted for the largest portion of investment in the Indonesian stock market last year, with a 67 percent share up from 66 percent in 2007. 

The figures show that foreign investors have confidence in the Indonesian market as liquidity problems in their home countries have forced them to invest in emerging markets, KSEI president director Ananta Wiyogo said recently. 

"Maybe they sold their assets in other countries, but not in Indonesia. We are still attractive to them," he said. 

The Indonesian stock market, whose main index and capitalization fell last year by 49.3 percent and 45.9 percent respectively, will see the return of investment this year on fairly low share prices and still-attractive yields, analysts say. 

Foreign investors have been able to make 15 to 20 percent in yield from investments in the stock market, and will continue to look at Indonesia and other emerging countries as they earn less from investments in developed countries. 

Foreign investors had left the market during the October collapse, but had now started to return and this trend is likely to continue this year, analysts say. 

While still dominating the capital market portfolio, asset value held by foreign investors declined by 45.7 percent to Rp 646 trillion (US$60.07 billion) by the end of last year, from Rp 1,191 trillion in 2007, as impacts of the global financial downturn impacted stock value. 

Local investors accounted for 33 percent of the market in 2008 with stock assets worth Rp 210.2 trillion, down from Rp 400.9 trillion in 2007. 

According to unofficial reports, less than 1.5 million Indonesians have investments in the Indonesian stock market. 

The Indonesia Stock Exchange (IDX) has targeted to attract 2 million local investors last year and again this year. 

Indonesia's largest institutional investor in the local stock market is the PT Jamsostek state pension company.

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