Jakarta Stock Exchange among the most dynamic in Asia

On April 16, 1992, the Capital Market Supervisory Agency (Bapepam) transferred the operation of all activities pertaining to the management of the Stock Exchange, as well as files and documents, furniture and fixtures, to PT Bursa Efek Jakarta (BEJ), the formal Indonesian language name of the Jakarta Stock Exchange.

The Jakarta Stock Exchange (JSX) has come a long way since then. It has established itself as one of the most dynamic securities markets in Asia. In 1993 it ranked third in comparison with the Philippines and Hong Kong in terms of the growth rate of the composite price index which was 114.64 percent.

In the words of Bacelius Ruru, Chairman of Bapepam: "It is our long term plan to establish Indonesia as one of the largest and most efficient securities markets in Asia." BEJ has a standard trading limit of 500 shares and a foreign ownership limit of 49 percent. The number of exchange members is recorded at 197, while there are 228 share issuers and 10 bond issuers.

Three broad categories of trading are conducted at BEJ. The first is regular trading involving continuous auction market in stocks, bonds and rights certificates. The second is non-regular trading, comprised of block trading in at least 200,000 shares, crossing by exchange members holding, buying, and selling orders at the same price and number of shares, foreign board trading between foreign investors on stocks whose foreign-eligible portion is 49 percent, and odd lot trading in shares below the standard trading limit. The third category is cash trading through direct negotiation on cash and carry terms.

The partial key stock listing requirements are in minimum, 200 shareholders, an operation period of three years, total assets of Rp 20 billion, stockholder equity of Rp 7.5 billion and paid up capital of Rp 2 billion. BEJ, with its offer of a wide range of quality securities in line with the growth of capital market instruments, is attracting Indonesian as well as foreign investors, and it is determined to increase its transparency, liquidity, fairness and efficiency to a level commensurate with stock exchanges around the world.

August 1993 saw the beginning of a spectacular rise in share trading and prices on the JSX that continued until the end of the year. Last year, however, the growth slowed and the composite index declined by 20 percent. Despite the index decline, the volume of trading increased as market capitalization grew to Rp 104 trillion from Rp 69 trillion in 1993.

This year, the growth is rising again, especially after the initiating of the JATS (Jakarta Automated Trading System). As of July 1995, market capitalization stood at Rp 122 trillion, with a total of 228 companies listed on the JSX.

History

It began as a small trading floor for Dutch colonial companies. Its roots can be traced back to the year 1912, when the Dutch colonial government formed Indonesia's first exchange, run by the Vereniging voor de Effectenhandel. Listings were made up of a handful of obscure local firms. Trading was suspended during World War I and resumed in 1925.

In the same year, a second bourse was established in Surabaya, East Java, and later a third was set up in Semarang, Central Java.

The Japanese occupation during World War II suspended the activities once again. In 1952, the Exchange was reopened for trading stocks and bonds issued previously by Dutch enterprises. There was another suspension when the government nationalized foreign companies in 1956. The bourse went into operation again in the year 1977.

Today, the 34 story tower in Jakarta's Central Business District, the home of the Jakarta Stock Exchange (JSX), has become an impressive landmark of the capital. Its electronic trading and fiber optic communication systems are two prime features which, in the words of Hasan Zein Mahmud, President- Director of JSX, "enables the exchange to anticipate the growing demands and responsibilities resulting from the interest our bourse is attracting from around the world".

A 5 by 2.7 meter electronic trading board dominates the new trading floor, where brokers conduct face-to-face trade. Visitors are able to watch trading action through a glass-enclosed gallery in the observation room. With push button service, electronic display panels provide real-time information on market movements, performance of individual stocks and other vital data. New dimensions

With the growth and advancement of telecommunications, the World Stock Market has taken new dimensions. The world never sleeps -- when the New York Exchange closes, London Exchange opens, then Singapore, Japan and so on. It has become all the more important to keep track of dealings in shares and bonds, resulting in currency becoming a trillion dollar business today. The vast potential and risk involved has resulted in the more expansive growth of the capital market in the Asia-Pacific Region in comparison with the rate of growth in other developed countries.

In Indonesia, the Jakarta Stock Exchange has seen tremendous growth and expansion. It has established itself as a bourse of international standard. The earnings growth of listed shares is one of the highest in Asia. The bourse has achieved significant gains in terms of market capitalization and trading volume. Equity raised in 1994 was Rp 10 trillion in comparison to Rp 4 trillion in the previous year. At the close of 1994, 217 Indonesian companies were listed on the Exchange, 172 more than the year before. These in turn represented almost 24 billion shares worth Rp.103 trillion, an increase of 143.7 percent and 49.84 percent respectively.