Stock Market Guide to the Jakarta Stock Exchange
Located in the vibrant city of Jakarta, the Indonesia Stock Exchange (IDX) came about as a result of a merger between the Jakarta Stock Exchange and the Surabaya Stock Exchange. At the end of December 2007, 383 companies were listed with the IDX having a combined market capitalization amounting to $212 billion.
While the Indonesia Stock Exchange may be relatively new, the capital market in Indonesia can be traced back to 1912 – the Dutch colonial era of the country – with the exchange being established to promote the interests of the Dutch East India Company. The exchange became inactive a number of times, such as during the first and second world wars, until in 1977 the Indonesian government revived the capital market, supporting it with a range of incentives and regulations. It was 30 years later that the stock exchange took on the name of the Indonesia Stock Exchange, reflecting its unified support of the country’s capital market.
Investment products offered by the IDX include equities, derivatives, mutual funds, bonds and Sharia-based capital market, the latter being in line with the principles of Islamic Canon Law regarding business activities. Of the products on offer, equities (also referred to as shares or stock) are the most popular. There are a number of reasons for this. Firstly, the issuing of stock is a primary source of funding for many successful businesses, and secondly, stock offers investors an interesting, often lucrative, return rate. Moreover, by purchasing shares in a company the investor has the right to attend the Shareholders’ General Meeting, and has a claim to the company’s income and assets. Of course, there is also an element of risk involved when investing in equities, but most seasoned investors have the attitude of “nothing ventured, nothing gained”.
The indices utilized by the IDX are the JSX Composite Index, LQ45 Index, Main Board (MBX), Development Board (DBX) and Sectoral Indices. Services offered include Order Data, Trade Data, IDX Indices Data, Investing News, Corporate Action, and Stock Summary. Certainly, the IDX has weathered some storms during its history, emerging to offer a world-class stock exchange equipped to compete in the fast-paced world of finance.