Some economic analysts rated that the government’s plan to increase oil
price would not lessen companies’ interest to issue bonds. The point was that
such a discourse was already there since about two years ago, that there was
probably reduced investors’ interest or negative impact on interest rate, but
the fact was that investors remained to invest.
Oil price increase had been anticipated by would-be investor o bond
issuers so the risk for companies seemed ignorable. About risk-profile, they
also did not worry about it since the fundamental corporate who issue the bonds
seemed notably healthy.
The only thing was if price of subsidized oil increased, it would jack
up inflation and bank’s interest. This would certainly bring effect to bonds
since investors would demand more coupons. However this was still rated as
reasonable as long as corporate bond’s out standings were relatively positive,
surely coupon’s yields would be competitive too.
The stocmarket’s prospect was just as positive because some would-be
emitents were already preparing to step in to the stock market. The heartening
fact was that so far Indonesia’s stock market was most profitable compared to
that of other ASEAN states. If there was any investor who invested USD 100 in
2003 in Indonesia’s premium shares, today the value would have been USD 980.
Assuming there was a similar case, i.e. an investor invested USD 100 in
premium shares Singapore 10 years ago, the value today would have been USD 33,
while in Malaysia the investment would have grown to USD 336. However, if USD
100 were invested in premium shares in Thailand 10 years ago, now the value
would become USD 556, while in the Philippines USD 70. The phenomenon indicated
that there were three big stock markets in ASEAN, i.e. Indonesia, the
Philippines and Thailand which were zealous.
The capital market was an open sector accessible by investors from all
over the world. An investor could invest or withdraw his capital at the stock
market simultaneously. The question was would Indonesia be able to benefit from
his high and profitable stock market for developing economy? Indonesia is a
paradise for investors: at least this appealing sector was enjoyed by foreign
investors who commanded the majority of emitents with biggest market
capitalization at the Indonesia Security Exchange [BEI].
Of 10 emitents with biggest market capitalization, 3 were owned by
foreigners. In five short years [since 2009 to May 21 2013], marketcap of the 3
emitents soared up high. All in all, with their majority ownership, foreign
investors were enjoying potential gain of Rp537.6 trillion.
The three emitents were: HM Sampoerna, Astra International and Unilever
Indonesia. Over that period, Sampoerna marketcap soared up by 744% form Rp45.58
trillion to Rp385,7 trillion or increasing by 340.12 trillion. This cigarette
producer underscored themselves as emitents of biggest marketcap in BEI.
Meanwhile Astra marketcap rose by 107% from Rp140.48 trillion to
Rp289.46 trillion [increasing by Rp148.98 trillion] and Unilever marketcap rose
by from Rp84.31 trillion Rp236.15 trillion, an increase of Rp151, 84 trillion.
The Sampoerna family who founded the company in 1913 sold all of their
shares [40%] worth Rp18.5 trillion on March 2005 to Phillip Morris, an American
company. Today the majority of shares were possessed by PT Phillip Morris
Indonesia with 98.18 ownership, the rest being owned by the public.
The profit potential reaped by the foreign company were not castles I
the sky. Just like HM Sampoerna, other big cap emitents also relied on
Indonesia’s strong domestic consumption with population of around 250 million.
The domestic market was supported by 70 million middle class people which grew
faster than national economic growth rate of 6%. Direct investment in Indonesia
was also growing, especially with the fact that investment in developed
countries was still gloomy amidst global crisis.
The profit being reaped by the company was attributed to the hawk eye
vision of well managed companies, and at the same time not hesitant in
injecting additional fund while running world class management. Investors also
had long term commitments. Supposedly the sweet profit potential was enjoyed by
local investors. It was a pity that the number of local investors who had keen
eyes to make the best of investment opportunity in BEI was still small in
number. Today there were only around 4500 thousand sub-account effect or less
than 0.16% who were being investors among total Indonesia’s population. Local
players were more interested in hunting instant profit by buying shares in the
morning session and sell them in the afternoon session.
And yet local players could benefit from prospective emintents for long
term investment. Local players could be more tactical in investing by buying
share of highly prospective companies run by sound management. Local players
needed not to struggle head over heels because it was money who worked for
them.
For that matter, the role of the Financial Service Authorities [OJK] and
other related parties including BEI were badly needed to awaken people’s
awareness to invest properly at the stockmarket. The public needed to be
educated whereby to master knowledge and the art of investing needed including
understanding all the risks.
It was advisable to include the education and training program in the
curriculum at early stage. On the other hand, to protect investors and to build
proper trading culture must be enhanced. OJK and the Government must ease and
inject incentives to drum up more companies offering shares at the stockmarket.
While companies were getting cheap funding, the high number of emitents
also stimulated stock exchange to be more liquid, and the people were having broader
choice of investment. Moreover there were 3,000 eligible companies who were
qualified for entering the stockmarket which means increase of market
capitalization.
Hence increase of people’s income and zest invest would be channeled to
the right instruments at the stockmarket. Cases of fictitious investment which
looted trillions of Rupiah needed not to repeat.
Moreover PT Bursa Efek Indonesia [BEI] rated that the stockmarket had
promising future and could be an alternative choice for the Indonesian people
instead of investing in real assets like land, building etc of higher risk. So
far many Indonesians were allergic to the word “share” and “stockmarket”
although such line of business was not less promising.
In case of risk, any type of investment at all incurred risk, but the
point was that we had to know and understand the characteristics and system of
the stockmarket. The stockmarket played an important role in a stockmarket,
because it it played dual role, i.e. economy and finance and combined two
interests: those who had excessive fund on the one had and those badly in need
of fund on the other.
Indonesia had sizable potential of local investors, with population of
more than 240 million people and GDP increasing by 33.3% in the past 3 years.
The more people interested in investing in the capital market, the stronger the
base of local investors would be in Indonesia’s stockmaret.
In line with market capitalization, Indonesia’s capital market today was
outsized only by Singapore. Now BEI was already bigger than the stockmarket of
Malaysia, Thailand, and the Philippines. So far National emitents were showing
good performance. Therefore foreign or local investors were trying to place
their shares in Indonesia’s emitents, especially in sector rated as
prospective.
However, today national investors numbered only not more that 400,000,
of which 150 companies had launched Initial Public Offering. The number was way
below ideal capacity supposedly owned by the national capital market. Therefore
market’s in-depth probing, strengthening of market efficiency and market
integrity were the important aspects. The public needed varied financial
products which they could access.
Hence, even if the government finally increased price of subsidized oil,
it would not generate negative effect to the capital market because investors
were ready to throw away their shares to be managed at the attractive
stockmarket. By prediction IHSG would approach the 5,500 level in the near
further and further and further to move up to 6,000. (SS)
Business News - June 05,2013
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