Indonesia’s exchange woos millennials with shows, contests

JAKARTA: Indonesia’s stock exchange is having trouble luring retail investors. Their solution? Target the millennials.

While the participation of individual investors in Indonesia is low compared with other Asian countries, those aged between 21 and 30 account for 26%, the biggest share of any age group, according to data from Indonesia Central Securities Deposit.

To capitalise on that, the century-old bourse has been holding pop concerts on its trading floor and running photo caption contests in a bid to appeal to younger, would-be market players.

Niken Dewanti and Gita Astika, both university students, were among hundreds of mostly formally-dressed young men and women swaying to the tunes of local musician Glenn Fredly at last month’s installment of those shows. On the sidelines, they sought out tips on maximising equity returns from booths run by at least one brokerage and the stock exchange.

“If I put my savings in the bank, it could be easily used up and the return is not great,” Dewanti, 20, said. “Starting next year, I want to switch a part of my savings at the bank to stocks.”

Individual investors – the stalwarts underpinning equity markets like China’s – accounted for just 41% of total turnover on the Indonesian stock exchange last year, com- pared with more than 80% for Taiwan and 59% in nearby Thailand.

A retail investor base provides an element of solidity for an equity market, acting as a buffer when offshore investors reduce their holdings, as is happening in Indonesia right now.

“The pressure on regulators to significantly increase the number of retail investors is increasing as the market is dominated by pension funds and other institutional investors,” said John Teja, a director at PT Ciptadana Sekuritas Asia in Jakarta. “Higher retail participation could also give more stability to the market.”

Individual investor participation has been increasing, but not by much. The portion of domestic equities owned by local retail investors rose to 8.2% as of September, from 5.9% at the end of 2014, according to data from Indonesia’s Financial Services Authority. The uptick came as foreign ownership of Indonesian shares dropped to 52.2% from 64.3% during the same period.

“All these events are aimed at attracting more domestic investors, particularly the younger ones,” Yulianto Aji Sadono, head of corporate communication at Indonesia Stock Exchange, wrote in text message.

“Our hope is as the number of retail investors increased and their understanding about the market becomes better, we can have more stable share prices.”