The Indonesia Stock Exchange (IDX) plays a pivotal role in handling securities transactions within Indonesia. Its primary mission is to provide a robust infrastructure promoting orderly, fair, and efficient trading. By 2021, the IDX achieved a record number of investors and had 713 company listings by 2020.
Key Takeaways
- Strategic Role: The Indonesia Stock Exchange (IDX) facilitates securities transactions in Indonesia.
- Core Objective: To provide the infrastructure for orderly, fair, and efficient trading of securities.
- Investor Growth: IDX saw a significant increase in the number of investors in 2021, breaking previous records in trading values and frequency.
- Company Listings: The IDX listed 713 companies by the end of 2020.
Understanding the Indonesia Stock Exchange (IDX)
The Indonesia Stock Exchange (IDX) emerged from the merger of the Jakarta Stock Exchange (JSX) and the Surabaya Stock Exchange (SSX). Historically, the JSX, founded in 1912 to benefit the Dutch East India Company, had a tumultuous journey being closed during both World Wars and undergoing periods of inactivity.
The exchange underwent significant regulatory changes between 1988 and 1992, invigorating trading activity. By 1995, the IDX adopted an automatic trading system and in 2002 set the foundation for remote trading, eventually leading to the notable 2007 merger forming the modern IDX.
Emerging markets like Indonesia carry unique risks for investors, including variable market efficiency and looser securities regulation compared to advanced economies like the US and Japan. However, these markets typically maintain vital financial infrastructure such as stock exchanges and banking systems.
Indonesia Stock Exchange Developments
The IDX continuously strides to be recognized as a world-class stock exchange. Highlights from its 2020 annual report include:
- Listing 51 new companies, surpassing targets by 110.87%.
- Ranking 7th globally for the number of newly listed companies.
- A 56% investor increase, the largest rise since 2016.
- Recording the highest daily trading frequency ever on December 22, 2020.
The IDX’s efforts in increasing investor participation set a historic record by 2020, yielding the highest number of company listings in the ASEAN region. Alongside 47 new exchange traded funds (ETFs) and 51 new securities, the IDX also expanded its offerings with corporate bonds and Real Estate Investment Trusts (REITs), tools easing investment in commercial properties.
In 2020 alone, the number of daily active investors saw a 73% increase compared to 2019, with the IDX’s market capitalization soaring to Rp 6,970 trillion ($490 billion) by 2021.
Related Terms: Jakarta Stock Exchange, Surabaya Stock Exchange, Emerging Markets, Advanced Economies, ASEAN.
References
- IDX. “Overview”.
- Indonesia Stock Exchange. “Indonesia Stock Exchange Annual Report 2020”, Pages 2-3.
- Indonesia Stock Exchange. “History & Milestone”.
- The Association of South East Nations. “About ASEAN”.
