JSX to launch two new instruments next year

Rendi A. Witular, The Jakarta Post, Jakarta

The Jakarta Stock Exchange (JSX) plans to launch two new market instruments next year in an attempt to increase revenues and help attract more investors into the stock market.

JSX president director Erry Firmansyah said the two new instruments were close-end mutual funds for real estate and American Warrants.

"The launching of the products are expected to increase the participation of investors in the stock market and to help raise our revenues," said Erry during a media briefing on Friday.

The JSX projected operational revenue of Rp 100 billion (US$11.1 million) next year, up from the Rp 78.1 billion estimated for this year.

Close-end mutual funds for real estate include mutual funds with revenues from property businesses as their underlying assets. Unlike ordinary mutual funds, also known as open-end funds, this instrument will be traded like financial securities once they are issued.

Holders of the portfolios must sell their units in the stock market to receive their funds back.

Meanwhile, American Warrant is a warrant that can be withdrawn at any time during the period of the warrant. One other warrant, which can only be withdrawn on its expiry date is called the European Warrant.

Elsewhere, during the briefing, Erry also expressed his concerns over the low-rate participation of local investors in the stock market, citing a lack of knowledge about the stock market as the main reason that impeded them from investing.

"There are currently about 100,000 retail investors that can be tracked, while those who could not be tracked may reach 200,000. The figure is still low," said Erry.

Retail investors who cannot be tracked usually use the account of their stock brokers to invest in the stock market in order to avoid taxes, while those who can be tracked have their own account.

According to Erry, foreign investors accounted for 55 percent of investment activities in the stock market. The Jakarta stock market has a capitalization of Rp 650 trillion with an average daily transaction value of Rp 1.12 trillion.

In a bid to increase the liquidity of the market, starting on Jan. 3, the bourse will introduce a new pricing mechanism for shares being traded in the stock market.

According to Erry, shares being traded at below Rp 500 each can move up or down by Rp 5.

Shares being traded between Rp 500 and Rp 2,000 can move at Rp 10, between Rp 2,000 and Rp 5,000 at Rp 25, and above Rp 5,000 by Rp 50.

As for companies whose share prices are below Rp 25, the JSX has encouraged them to conduct a stock reversal to increase the value of their price, or to launch corporate actions to raise investor confidence in the shares.

Erry said there were currently eight companies with share prices below Rp 25.