The commencement of trading at the Indonesia Stock Exchange (BEI) in 2024, abbreviated locally as BEI, marked a significant event as it was officially inaugurated on Jalan Sudirman, Jakarta, on Tuesday (2/1/2024). This pivotal moment was not only a formal opening of stock exchange trading but also brought forth a wave of optimism for the nation. With global economic indicators showing a slight improvement, various achievements in Indonesian capital market have become evident. Over the last four years, investor participation in the Capital Market has surged, experiencing a remarkable fivefold increase.
As time unfolds, the role of the capital market has evolved beyond being a mere investment avenue for individuals; it has become a source of livelihood, particularly through stock instruments. The stock market, with its potential for significant returns, often surpassing hundreds of percentage points within a few months, has attracted a diverse array of investors – both fundamental and technical.
However, the landscape changed dramatically following the substantial correction of the Composite Stock Price Index (IHSG) in the early months of 2020, reaching its pinnacle on March 20, 2020. This correction served as a wake-up call, especially for new investors, highlighting that success in the stock business is not always guaranteed.
The drop in IHSG from 6300 to 3900 within three months highlighted the severity of the prevailing pandemic, as written by DJKN Kemenkeu. Meanwhile, the signing of Government Regulation Number 21 of 2020 on March 31, 2020, which implemented large-scale social restrictions in response to Covid-19, further complicated the situation. Investor responses during this period were diverse, expressed through various forums and social media. Opinions ranged from those anticipating a further decline in IHSG to those predicting a rebound.
Despite the substantial increase in the number of investors, the transaction volume in 2019 surpassed that of 2020. In 2019, the transaction volume amounted to 36,534,971,048, while in 2020, it was recorded at 27,495,947,445. The number of investors in the capital market continues to rise steadily year after year.
Positive Performance in the Indonesian Capital Market
The Chairman of the Financial Services Authority (OJK), Mahendra, noted, “The number of investors in the capital market, as seen through Single Investor Identification (SID), has reached 12.16 million, almost increasing fivefold in the last four years.” This underscores the growing interest and participation in the capital market, as revealed during the Opening of Capital Market Trading at the Main Hall of BEI on Tuesday (2/1/2024), as quoted from Kompas.
BEI data reveals a steady increase in the number of investors over the years. In 2019, there were 2.4 million SID investors, a figure that grew to 3.8 million SID in 2020. Subsequently, in 2021, the number of investors further increased to 7.4 million SID, and by 2022, it reached 10.3 million SID.
Throughout the year 2023, the capital market showcased positive performances. The Stock Price Index recorded a 6.16% increase, reaching 7,272.8 compared to the previous year at 6,850.62. Concurrently, market capitalization experienced a significant uptick of 22.9%, rising from IDR 9.499 trillion in 2022 to IDR 11.674 trillion in 2023. However, OJK recognizes that the market capitalization is still below its potential.
Mahendra emphasized, “If we evaluate its potential, it is still relatively small. The value of the market capitalization of the Indonesian capital market only reaches 46 percent of GDP compared to certain ASEAN countries that have reached over 100 percent.”
He added, “Similarly, our number of investors (SID), which is only 6.4 percent of the productive age population in Indonesia.” To harness the extraordinary domestic potential, efforts are continually underway to enhance integrity, credibility, and good governance throughout the capital market ecosystem.
Foreign Investors to Inundate Indonesia in 2024
Looking ahead, OJK expresses optimism that foreign investors will once again engage in net buys, with values surpassing those of 2023. Foreign fluctuations throughout 2023 depended on global conditions, as Mahendra explained that global sentiment would influence foreign actions in the capital market.
Mahendra elaborated on the current positive sentiment in the financial market, supported by expectations of the conclusion of the global interest rate hike. This development has strengthened global currencies and led to a reduction in volatility in stock markets, bonds, and exchange rates. Consequently, foreign investors are gradually returning to emerging markets as net buyers.
In the information provided, foreign investors recorded net sales of IDR 6.18 trillion on the stock exchange throughout 2023. With stabilized global conditions, net purchases from non-resident or foreign investors could potentially be higher.
2024: A Year of Blessings for the Indonesian Capital Market
Vice President of the Republic of Indonesia, Ma’ruf Amin, declared that 2024 signifies a year of blessings for advancing the performance of the capital market in the country. This optimistic outlook was shared during the official opening of the Indonesia Stock Exchange (BEI) trading for 2024 on Jalan Sudirman, Jakarta, on Tuesday (2/1/2024).
“We are optimistic about the bright performance of the capital market in 2024 after experiencing this year of optimism in 2023. Hopefully, this year will be a blessed year. Our economy will be even better,” he conveyed to journalists, quoted from Bisnis.
Highlighting positive indicators, BPS data records Indonesia’s economic growth in the third quarter of 2023 at almost 5% annually (year-on-year/yoy). Reflecting on the performance of the Indonesian capital market throughout 2023, the Vice President emphasized optimism. This is attributed to the maintained stability of the capital market and positive growth evident in increased trading activities, fund mobilization, and the growing number of retail investors.
The current number of retail investors in the capital market, exceeding 12 million, indicates growing participation from the community. Expressing gratitude for the improvements experienced in 2023, surpassing targets, the Vice President concluded with hope for an even more prosperous 2024.
In light of these positive developments, the Vice President stressed the importance of ensuring that the capital market is no longer exclusive to large corporations. Instead, he emphasized the need to provide equal opportunities for small and medium enterprises (SMEs) to thrive in the market. This approach aims to foster an inclusive and diverse landscape within Indonesia’s dynamic capital market.
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