Domestic investors' base needs to be broadened: Seminar<\/p>\n
NUSA DUA, Bali (JP): Securities analysts and businesspeople
\nhave reaffirmed the important role of domestic investors to
\nstrengthen the capital market, which is still dominated by
\nforeign investors.<\/p>\n
The Association of Indonesian Issuers (listed companies)
\nchairman Rosano Barack said, \"We badly need to increase the
\nparticipation of our local investors to improve our capital
\nmarket's liquidity and to offset the domination of foreign
\ninvestors.\"<\/p>\n
Rosano was briefing reporters Friday evening on the conclusion
\nof a two-day seminar here on the role of local investors in the
\ncapital market.<\/p>\n
Minister of Finance Mar'ie Mohammad, who closed the meeting,
\nurged the share issuers to improve their performances and comply
\nwith the capital market regulations in order to attract new
\ninvestors.<\/p>\n
Rosano said, \"We all agreed to further improve not only our
\nperformance but also the transparency of our companies.\"<\/p>\n
\"As our market is still very young -- only 8 years old --
\nwe're still in the process of learning. But we'll do our best,\"
\nhe said.<\/p>\n
But he conceded that the association needed the cooperation of
\nother players, such as fund managers, accountants, lawyers, the
\nregulators and pension funds and insurance companies.<\/p>\n
Rosano said that the Association of Indonesian Securities
\nCompanies has also agreed to help pension funds and insurance
\ncompanies to better understand the capital market.<\/p>\n
Many analysts have expressed concern over the fact that only
\n0.22 percent of about 200 million people in the country have
\ninvested in the capital market.<\/p>\n
As a comparison, about seven million of the 30 million total
\npopulation of Malaysia invests in the capital market.<\/p>\n
Bacelius Ruru, the director general of state-owned firms, said
\nthat foreign trading on the market accounted for more than 70
\npercent of total daily transactions.<\/p>\n
\"But the foreign investors only buy the blue chips. As a
\nresult, more than 40 percent of the listed shares are not
\nliquid,\" said Bacelius, who is the former chairman of the
\nIndonesian Capital Market Supervisory Agency.<\/p>\n
He warned that the foreign domination could cause a crash like
\nthe one in Mexico in 1994, when foreign investors sold out their
\nportfolios in the capital market.<\/p>\n
Bambang Subianto, the director general of financial
\ninstitutions, urged the pension funds and insurance companies to
\ninvest more in the capital market.<\/p>\n
According to PT Danareksa's president, Glenn M.S. Yusuf, the
\ngrowth of earning per share in the Jakarta Stock Exchange
\naveraged at 27.16 percent during the last five years, as compared
\nto the average 22 percent time deposit interest rates.<\/p>\n
Glenn said that in 1996 the growth was 37.7 percent.<\/p>\n
\"The market is actually profitable. The most important thing
\nis how we manage the risks in the capital market,\" he said.<\/p>\n
Institutional investors, notably pension funds and insurance
\nfirms, have an estimated total of US$13.4 billion in investment
\nfunds. But only 18 percent -- 10 percent in shares and 8 percent
\nin bonds -- of the total fund was invested in the capital market.<\/p>\n
Seventy percent was invested in banks' deposits and the rest
\nin various other investments. (bnt)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/domestic-investors-base-needs-to-be-broadened-seminar-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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