INDONESIA MARKET REPORT - Asia Securities Forum · 31/12/2012 · On 31st December 2012, JCI...

INDONESIA MARKET REPORTBy Association of Indonesian Securities Companies

1

Taipei, October 2013

Highlights

• Economic Performance• Capital Market Performance• Regulatory Developments• Prospect for Indonesia Securities Industry &

Challenges

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• Global credits have got off strong start since early 2012 buoyed by thenews of a deal in the US Congress to avoid the fiscal cliff supported bymanufacturing data from some Asian countries.

• Global investors are keen to increase their exposure to the world’s fastestgrowing economies, especially in the emerging Asia

• Indonesia economy slowed for the 4th consecutive quarter to 5.81% yoyin 2Q-2013 down from 6.02% yoy recorded in the 1Q-2013 asgovernment spending is not enough to offset the slowing private sectorconsumption and investment.

• The growth rate is mainly driven by 11.5% expansion in transport andcommunication sector, 8.07% in financial and real estate, 6.88% inconstruction, 6.6% in electricity, gas and water and 6.5% in trade, hoteland restaurants and 5.9% in manufacturing.

• Foreign reserve decreased to $98 billion by June 2013 from $112.8 billionat the end of 2012.

• The exchange rate of IDR against USD keeps depreciating from IDR8,991(2010) to IDR8,768 (2011), IDR9,638 (2012) and further down toIDR9,929 by June 2013 and IDR 11,461 by end of September 2013

• The Central Bank increased BI rate to 7.25% in September 2013 afterhaving raised it by 50bps in August. The central bank attempts to stabilizethe currency, control the inflation rate and the current account.

3

IMF World GDP (%)

Economic Actual Projected

Outlook 2012 2013 2014

Asia 6.5 6.9 7.0

Japan 1.9 2.0 1.2

China 7.8 7.8 7.7

India 3.2 5.6 6.3

ASEAN-5 6.1 5.6 5.7

United States

2.2 1.7 2.7

Euro Area -0.6 -0.6 0.9

Russia 3.4 2.5 3.3

Latin America

3.0 3.0 3.4

Source IMF World Economic Outlook, July 2013

Economic Performance


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Source: BI, BPS

Indicator 2008 2009 2010 2011 2012 Jun-2013

Population (million) 229.0 231.8 237.6 241.1 244.7 246.5GDP Growth Rate (% y-o-y) 6.0 4.5 6.1 6.5 6.2 5.8

Export (USD million) 139,606 119,646 158,074 200,788 188,496 90,901

Import (USD million) 116,690 88,714 127,447 166,005 179,878 89,901

Surplus (USD million) 22,916 30,932 30,627 34,783 8,618 1,000

Exchange Rate-end period (IDR/USD) 10,950 9,425 8,991 8,768 9,638 9,929

Foreign Exchange Reserve (USD million) 51,639 66,105 96,207 122,671 112,781 98,095

Unemployment Rate (%) 8.39 7.87 7.14 6.9 6.8 6.6


Source : BI – Indonesia Central BankSource : BI – Indonesia Central Bank

In September 2013, Indonesia's central bank increased their benchmark BI rate by 25 bps to 7.25%, to fight against increasing inflation and weakening IDR against main currencies. Bank Indonesia also raised the overnight deposit facility rate, known as FASBI, to 5.5% in September 2013.

August 2013 inflation was recorded at 8.79% y-o-y. This is the highest level since 2009 due to expected fuel price hike to be taken by the Government in the second semester prior to Idul Fitri holidays.

The rupiah fell to a four year-low of 11.461 to the U.S. dollar by the end of September 2013, even though the central bank was suspected to have sold around $200 million of dollars to calm the market. Gradual but persistent weak data on Indonesia, started with slower economic growth, quickened inflation, widening trade deficit, and lastly wider current account deficit has, sent bonds, stock, and IDR currency fell significantly.

6

Capital inflow to Indonesia has increased Foreign Exchange Reserve.

On April 2011 Indonesia Country Rating was upgraded by S&P to BB+ (one level below investment grade), marked with positive outlook, due to it’s “resilient” economy and improving finances. Later, in early of January 2012, Moody’s also increased the rating to Baa3.

Exchange Rate vs. Foreign Exchange Reserve (Q1 2008 – Q2 2013)

Source :BI– Indonesia Central Bank

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000 M

ar-0

8

Jun-

08

Sep-

08

Dec

-08

Mar

-09

Jun-

09

Sep-

09

Dec

-09

Mar

-10

Jun-

10

Sep-

10

Dec

-10

Mar

-11

Jun-

11

Sep-

11

Dec

-11

Mar

-12

Jun-

12

Sep-

12

Dec

-12

Mar

-13

Jun-

13

Reserves Exchange Rate

(In U

S$ m

illion

)

(IDR

/US$

)


• Stock Market The recovery of Indonesia economy reflected by the performance of the Jakarta Composite Index (IDX), Listed Issuers

and Market Capitalization. On 31st December 2012, JCI increased by 12.94% to 4,316, with a record high at 5,124 on 20th May 2013 before it

declined to 4,818 on 30th June 2013 and even to 4,316 on 30th September 2013

7

46.1%

Source : IDX

Performance of Various Global Stock Markets as of 30 Sept 2013

Source : WSJ

2011 2012 Jun-13Total Trading Value (IDR Billion)

1,223,441 1,116,113 - 8.77%

1,716,816 + 53.82 %

Daily Average Trading Value (IDR Billion) 4,953 4,537 8,541

Composite Index - High 4,193.44 4,375.17 5,021.61 Low 3,269.45 3,654.58 4,418.87 Close 3,821.99 4,316.69 4,818.89 Listed Issuers 436 457 472 Market Capitalization (IDR Billion)

3,537,294 4,126,995 + 16.67 %

4,739,604 + 14.84 %

4,818.8

Capital Market Performance

YTD Change % ChartCountry Index Last Mtm Ch.% Ytd Ch.%Brazil IBOVespa 52,338.19 4.66% -14.13%China SHANGHAI 2,174.66 3.64% -4.16%India SENSEX 19,379.77 4.08% -0.24%Indonesia JCI 4,316.18 2.89% -0.01%South Korea KOSPI 1,996.96 3.66% 0.00%Singapore FSSTI 3,167.87 4.59% 0.02%Hong Kong HANGSENG 22,859.86 5.19% 0.90%Portugal PORTUGAL PSI20 5,953.51 2.51% 5.28%Italy FTSEMIB 17,434.86 4.51% 7.14%Netherlands AEX 374.92 3.30% 9.40%United Kingdom FTSE100 6,462.22 0.77% 9.57%Greece ATHEX COMP 1,014.06 12.68% 11.69%Spain IBEX35 9,186.10 10.80% 12.47%Germany DAX 8,594.40 6.06% 12.90%France CAC 4,143.44 5.33% 13.80%United States DJIA 15,129.67 2.16% 15.46%Japan NKY 14,455.80 7.97% 39.06%

• Jakarta Composite Index and Capital Market Milestones

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*) 27 September 2013

46.1%

Source : IDX -

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

1992 1993 1994 19961995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

30-Nov-2007Consolidation of the SSX into

JSX to become the IDX2,688.332

6-Oct-2004Launching of Stock Option

856.060

28-Mar-2002Implementation of

Remote Trading481.775

9-Sep-2002T+4 to T+3 Settlement430.271

21-Jul-2000Scriptless Trading

512.617

23-Dec-1997Founding ofKSEI397.031

23-Jul-1997Financial Crisis

718.189

6-Aug-1996Founding of KPEI

554.790

24-Jul-1995Merging process of SSX into

Bursa Paralel Indonesia509.532

22-May-1995JATS

461.389

13-Jul-1992Privatization of JSX321.544

8-Oct-2008Suspend Trading

1,451.669

20-May-2013Highest Index

5,214.976

2-Mar-2009JATS Next G 1,256.109

28-Oct-2008Lowest Index in 2008

1,111.390

2010 2011 2012 2013*

02-Jan-2013New Trading Hours

4,254.816

1992 – 27 September 2013

• Jakarta Composite Index

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2002 – 27 September 2013

424.945

691.895

1,000.2331,162.635

1,805.523

2,745.826

1,355.408

2,534.356

3,703.512

3,821.992

4,316.687

4,423.719

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

55.30% 52.08%

2002 2003 2004 2005 2006 2007 2008 2009

86.98%-50.64%

3.20%

2010 2011

8.39% 62.82% 44.56% 16.24%

2012

46.13% 12.94%

2013*

2.48%

Distributions of Tradeable Stocks*

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Institutions includesInsurance, Mutual Fund, Pension Fund, Financial Institution, Corporate, Securities Company, Foundation

Source Data : Indonesia Central Securities Depository (KSEI)

*) Scriptless Stocks

Investors’ Nationality August 2013 2012 2011 2010

(Equity Only) (Mill. USD) % (Mill. USD) % (Mill.USD) % (Mill.USD) %

Local Investor 99,911 44.22% 107,613 41.21% 92,558 40.14% 78,138 37.20%

Individual 13,436 13.45% 14,480 13.46% 16,647 17.98% 13,827 17.70%

Institution 86,367 86.44% 93,003 86.42% 75,783 81.88% 64,150 82.10%

Others 107 0.11% 130 0.12% 129 0.14% 160 0.20%

Foreign Investor 126,052 55.78% 153,504 58.79% 138,055 59.86% 131,909 62.80%

Individual 2,428 1.93% 3,221 2.10% 2,614 1.89% 341 0.26%

Institution 84,549 67.07% 106,018 69.07% 100,123 72.52% 97,483 73.90%

Others 39,075 31.00% 44,265 28.84% 35,318 25.58% 34,086 25.84%

TOTAL 225,963 261,117 230,614 210,047

Based on Investors’ Nationality (2010 - August 2013)

Foreign Investor Activities

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Figures in Million USD

1,703 1,409

2,337

2,804

(443)

241

(260)

2,043

(30)

479 610

(985)

186 333

280 350

1,714

273

(165)

988

159

(804)

(208)

484

43

976

276

(320)

13

(772)

591

1,163

188 74

(36)

(2,028)

(241)(521)

38

2008

2009

2010

2011

Jan

Feb

Mar

Apr

May

Jun Jul

Aug

Sep Oct Nov Dec20

12 Jan

Feb

Mar Apr

May Jun

Jul Aug Sep Oct

Nov

Dec

2013

Jan Feb Mar Apr

May Jun Jul Aug

Sept

At Indonesia Stock Exchange: 2008 – 27 September 2013

Market Capitalization and Trading Value by Industry

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2.1%

6.5%

6.8%

6.9%

8.6%16.0%

15.4%

19.3%18.4%

2.4%

6.1%

7.6%

7.9%

20.9%

6.5%

13.5%

23.4%

11.8%

Agriculture (21)

Mining (38)

Basic Industry And Chemicals (61)

Miscellaneous Industry (45)

Consumer Goods Industry (37)

Property And Real Estate (55)

Infrast ructure, Ut ilit ies & Transportat ion (46)

Finance (79) Trade, Services & Investment (110)

MarketCapitalizat ion

TradingValue

27 September 2013

Bond MarketIn August 2013 total bond outstanding was circa USD 104.5 billion which was represented by Government bonds of 81% and Corporate bonds of 19%.

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Corporate Bond Government Bond

*) August 2013

Outstanding

Volume Frequency (Billion USD) (Million USD) (X)

2003 45.53 162.68 51

2004 44.67 238.12 112

2005 41.20 220.92 100

2006 45.73 132.82 134

2007 52.03 553.86 227

2008 54.20 395.24 206

2009 55.31 310.31 218

2010 70.64 748.54 381

2011 78.91 867.01 433

2012 85.31 843.82 552

2013* 84.86 672.94 461

Year Daily Average Transactions

Listed & Traded

Outstanding

Volume Frequency (Billion USD) (Million USD) (X )

2003 5.30 6.86 12

2004 6.86 8.05 21

2005 6.48 10.15 21

2006 7.40 15.09 11

2007 9.25 30.96 63

2008 7.63 22.61 50

2009 8.50 15.68 40

2010 12.71 40.10 70

2011 16.03 55.80 73

2012 19.70 67.69 103

2013* 19.59 71.52 90

YearDaily Average Transactions

Listed & Traded

Pension Fund5,592.98 29.63%

Mutual Fund4,095.87 21.70%

Financial Inst3,989.89 21.14%

Insurance2,670.05 14.14%

Corporate1,305.78 6.92%

Individual448.44 2.38%

Others417.11 2.21%

Foundation270.93 1.44%

Securities Company

85.86 0.45%

Bank30,551.08

36%

Foreign25,998.72

31%

Insurance Company11,414.32

13%

Mutual Fund4,063.53

5%

Others3,667.15

4%

Pension Fund3,496.89

4%

Individual3,446.54

4.1%

BI2,126.51 2.51%

Securities Company

100.70 0%

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Source : Indonesia Central Securities Depository (KSEI)

Corporate Bond Ownership Government Bond Ownership

Source : Indonesian Debt Management Office (DJPU)

Capital Market PerformanceBond Ownership Distributions

August 2013 (in Million USD)

Mutual Fund The industry enjoyed favorable development up to

2012 and it showed consolidation by June 2013

15

Source : OJK

Composition of mutual funds NAV by type of investment as of July 2013 which totalled at USD 18.89 billion


Equity 7.72

40.86%

Capital Protection Fund3.67

19.42%

Fixed Income2.94

15.55%

Mixed2.29

12.13%

Money Market1.18

6.26%

Sharia-Equity0.42

2.23%

Sharia-Mixed0.25

1.31%

Sharia-Protection0.06

0.33%

Sharia-Fixed Income0.12

0.63%Sharia-Index

0.14 0.73%

Sharia-money market

0.00 0.01%

ETF-Equity0.03

0.13%

Index0.04

0.20%

ETF-Index0.035

0.19%

ETF-Fixed Income0.00

0.02%

Source : OJK

New Issues and fund raising The industry enjoyed favorable development up to 2012 and the first semester in 2013 and it showed consolidation trend by the second semester.

16

Source : IDX

New issue structure by equity related products i.e. rights, warrants; and bonds issued by corporations and governments in 2012

NEW ISSUES 2009 2010 2011 2012 Jun-13EQUITY

IPO (IDR trillion) 3.85 29.68 19.59 10.14 10.11

Rights (IDR trillion) 8.56 48.16 42.14 18.19 18.46

Others (IDR trillion) 2.50 1.87 0.58 1.64 1.94

Sub Total 14.91 79.71 62.31 29.97 30.51 BONDS

IPO - Corp (IDR trillion) 29.68 39.07 45.93 69.45 31.14

IPO - Govt (IDR trillion) 94.57 122.53 163.12 197.55 112.15

Sub Total 124.25 161.60 209.05 267.00 143.29

Total 139.16 241.31 271.36 296.97 173.80


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2011 2012Change11-12

2013*Change12-13*

TSE Tokyo Stock Exchange (TSE) 8,455.350 10,395.180 22.94% 14,760.070 41.99%

DJI Dow Jones (DJI) 12,217.560 13,104.140 7.26% 15,328.300 16.97%

FT100 UK (FT100) 5,572.300 5,897.810 5.84% 6,523.370 10.61%

PSE Philippine Stock Exchange 4,371.960 5,812.730 32.95% 6,379.810 9.76%

BM Bursa Malaysia (BM) 1,530.730 1,688.950 10.34% 1,776.160 5.16%

IDX Indonesia Stock Exchange (IDX) 3,821.992 4,316.687 12.94% 4,423.719 2.48%

HKeX Hong Kong Exchanges (HKeX) 18,434.390 22,656.920 22.91% 23,207.040 2.43%

SET Stock Exchange of Thailand (SET) 1,025.320 1,391.930 35.76% 1,417.490 1.84%

SGX Singapore Exchanges (SGX) 2,646.350 3,167.080 19.68% 3,210.180 1.36%

BSE Bombay Stock Exchange (BSE) 15,454.920 19,513.450 26.26% 19,726.860 1.09%

KRX Korea Exchanges (KRX) 1,825.740 1,997.050 9.38% 2,011.800 0.74%

SSE Shanghai Stock Exchange (SSE) 2,199.420 2,269.128 3.17% 2,160.030 -4.81%

2011 – 27 September 2013

Capital Market PerformanceJCI in Comparison to Regional Indices Performance

TSE27.08%

HKEX19.98% SSE

19.42%

ASX8.14%

KRX6.94%

BSE6.18%

SGX3.48%

BM2.86%SET

2.33%IDX

2.28%

PSE1.30%

IDX : Indonesia Stock ExchangeKRX : Korea ExchangeSET : Stock Exchange of ThailandBM : Bursa MalaysiaSGX : Singapore ExchangesTSE : Tokyo Stock ExchangeHKEX : Hong Kong ExchangesSSE : Shanghai Stock ExchangeBSE : Mumbai Stock Exchange

ASX : Australia Stock Exchange PSE : Philippine Stock Exchange

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Source : Bloomberg

26 September 2013 (Billion USD)4,570

3,372 3,278

1,3741,171 1,044

588 482 394 385 220

TSE HKEX SSE ASX KRX BSE SGX BM SET IDX PSE

Capital Market PerformanceMarket Cap Among Asia-Pacific Region Exchanges

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Source : CEIC & Bloomberg

254%

165%

86%

106%

79%

119%

100%

73%

50%

55%

179%

137%

77% 87

%

69% 80

%

55% 60%

45%

37%

224%

151%

102%

101%

93%

88%

65%

61%

48%

36%

Singapore Malaysia Thailand Korea Philippines Australia India Japan Indonesia China

2010 2011 2012

“Capital market penetration in Indonesia Is relatively low in Asia ...”

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Capital Market PerformanceMarket Capitalization to GDP Ratio in Asia

Regulatory Developments

The newly establishment Financial Services Authority (Otoritas Jasa Keuangan/OJK) started their operation by supervising non-bank companies in 2013 and banking sector in 2014

2012 was a strategic year for the Capital Market Infrastructure Development Team (TPIPM) that was successful in establishing, completing & operating core infra-structure projects (started in 2010)

KSEI coordinated the implementation of Single Investor Identity (SID) and Investor Fund Account (RDN) to enhance protection and improve disclosure through AKses facility

KPEI coordinated the establishment of STP (Straight Though Processing ) and Continuous Net Settlement (CNS) to omit manual intervention, enhance security & processing speed.

BEI coordinated the establishment of Data Warehouse-Business Intelligent (DW) by integrating CM networks to enhance surveillance, trading and reporting system.

Exchange Members (EM) started to operate their new working capital (MKBD) formula to improve risk management and to up-grade its integrated FO-BO system.

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The incorporation of PT P3IEI, a company especially established to manage securities investor protection funds and to enhance investors protection as well as capital market integrity & professionalism.

OJK issued a regulation on a new reporting requirement (ARIA) for fund managers, related to their contractual and non-contractual products to improve disclosure information.

The establishment of PT Indonesian Capital Market Electronic Library (ICAMEL) to boost capital market awareness and education to public investors

New regulation for issuers on the establishment of Audit Committee to be in line with the recommendation from the Report on Observance of Standards and Codes (ROSCO – CG)

To develop sharia IPO market, OJK issued a new regulation that allows issuers to use one consolidated prospectus for conventional and sharia instruments to improve efficiency.

KYC and Anti-Money Laundering enhancement regulations

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Regulatory Developments

Prospect for Indonesia Securities Industry & Challenges

Global economy expected to record lower growth of 3.0% in 2013, the Euro area continued experiencingprolonged debt crisis, meanwhile the US economy was showing some improvements, but remained fragile

Bank Indonesia surprised the market on 12th of Sep 13 by increasing benchmark BI rate by 25 bps to 7.25%after increasing it by 50% to 7.0% (29th of Aug), by 50 bps to 6.50% (11th of Jul), as it stepped up its battleto combat inflation, exchange rates and outflows. The increase was the third since June 2013 whereby BIincreased its rate by 25 bps after keeping it at low at 5.75% since February 2012

Positive economic outlooks:• The Indonesia economic growth is expected to reach 5.5%-5.9% (revised from 5.8%-6.2%) in 2013 and

to 5.8%-6.2% (from 6.0%-6.4%) in 2014 amid to the less vibrant global economic growth of 3.5%.• Inflation in 2012 is manageable (targeted at 4.5%) and interest rate is stable.

Estimated strong net profit growth while global economic upset by crisis of the Euro Zone

OJK issued their first regulation on consumer protection that focus on client asset protection will continueto strengthen the confidence of the investors.

Implementation of bureaucracy reform at Regulatory function system and supervision (OJK/ FinancialServices Authority) that is integrated in overall activity of financial services sector

The OJK is primarily responsible for supervising and regulating financial and banking industries:

Financial services activities in banking sector

Financial services activities in capital market sector

Financial services activities in insurance, pension funds, financing institutions, and other financialservices institutions

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Growing volume transactions followed by increasing domestic investor participation

Strict market supervisory and broker internal control employed, paired with systemenhancement to increase efficiency in the operation area, enforcing more robust operationfor brokers

The implementation of online trading and DMA facilities is expected to increase trading valueand fasten the growth of investors significantly

The challenges for securities industry are:] The development of capital market derivatives products The development of retail market (currently is only 300,000 accounts or 0.125% of total

Indonesia population) To increase number of listed companies

The challenges for OJK are :

Supervision of future and commodities market (which is under Trade Ministry)

Supervision of cooperatives for the ability to take deposit ( which is under Cooperativesand SME’s Ministry)

Fee and charges to industry

Financial literacy

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Prospect for Indonesia Securities Industry & Challenges

INDONESIA MARKET REPORT - Asia Securities Forum · 31/12/2012 · On 31st December 2012, JCI...

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