The capital market is expected to support economic recovery this year. However, investors should remain prudent as market conditions remain volatile.
By
Dimas Waraditya Nugraha/Karina Isna Irawan
·5 minutes read
Kompas/Priyombodo
Coordinating Minister for the Economy Airlangga Hartarto (two left), with (left-right) Chief Executive Officer of the Capital Market Financial Services Authority (OJK) Hoesen, Chairman of the OJK Board of Commissioners Wimboh Santoso, President Director of the Indonesia Stock Exchange (IDX) Inarno Djajadi at the inauguration of the closing trade Indonesia Stock Exchange 2020 in Jakarta, Wednesday (30/12/2020).
JAKARTA, KOMPAS - Throughout 2021, the capital market is expected to play an important role in economic recovery, especially as a source of funds for corporations and micro, small and medium enterprises (MSMEs). In addition, the development of Covid-19 vaccines in various parts of the world has also brought positive sentiment for the stock market since earlier this year.
However, the sustainability of the positive sentiment for the Covid-19 vaccine is largely determined by its effectiveness and future development. Therefore, the stock market in 2021 is expected to move into a stage of skepticism or between skepticism and pessimism.
The director of the Indonesia Stock Exchange (IDX) for Company Assessment, I Gede Nyoman Yetna, said in Jakarta on Monday (4/1/2021) he was optimistic that there would be an increase in securities issuance in the capital market this year, either through an initial public offering (IPO) and rights issues (preemptive rights) or the issuance of bonds.
The optimism is in line with the improvement of a number of economic growth indicators in the real and financial sectors at the end of 2020. "In the year of economic recovery, the interest of business owners to turn their companies into public companies is increasing," he said.
As of 4 Jan, 2021, there are 28 companies in the pipeline to launch their IPOs. One of them is PT DCI Indonesia Tbk, which has received approval from the Financial Services Authority (OJK) and will list its shares on the stock market on 6 Jan.
SUMBER: DBS
Trend of global stock market movements in January 2021
Coinciding with the opening of stock trading in 2021 on Monday, oil palm plantation company, PT FAP Agri Tbk, became the first issuer to be listed on the stock exchange in 2021 following its IPO.
Meanwhile, on the first day of stock trading on Monday, the Jakarta Composite Index (JCI) rose 2.1 percent to close at 6,104.9. For several weeks at the end of 2020, the JCI stayed at the range of 6,000 with the highest level recorded at 6,165.6 on 21 Dec, 2020. From the beginning of January to the end of December 2020, the JCI declined 5.09 percent.
Equity crowdfunding
The chairman of the OJK, Wimboh Santoso, said that the revival of the Indonesian capital market over the past year was reflected in an increase in investor transactions by 73 percent from those recorded in 2019. Meanwhile, the transaction of retail investors increased fourfold, the highest in the Southeast Asia region.
This year, fundraising could be even greater.
"This is an opportunity for the rise of fund-raising in the capital market. Last year, the corporate interest in raising funds through public offerings could be still maintained despite the pandemic. This year, fundraising could be even greater, "he said.
OJK also launched a technology-based crowdfunding (SCF). According to Wimboh, with the crowdfunding, young people and SMEs can raise funds through the capital market easier. "The crowdfunding is still quite promising. This can be seen from the large number of companies that raised funds in the capital market last year, ”he said.
Kompas/Priyombodo
Investors observe the movement of the index ahead of the close of trading at the Indonesia Stock Exchange 2020 in Jakarta, Wednesday (30/12/2020).
Through equity crowdfunding (ECF), continued Wimboh, the opportunity for MSMEs to raise funds from the capital market is improving. The potential value of funds that can be raised in the capital market for MSMEs or through the ECF reaches Rp 74 trillion, involving around 160,000 MSMEs.
When opening stock trading this year, Coordinating Economic Minister Airlangga Hartarto said the number of companies seeking funds in the capital market had the potential to increase during the national economic recovery period in 2021. This year, IDX is targeting 30 companies to conduct IPOs.
"I hope the increase in the amount of funds will be quite significant. Business and economic recovery can encourage many companies to seek funds in the capital market, "he said.
Airlangga said the government was continuing the Covid-19 Handling and National Economic Recovery (PC-PEN) program this year. The launch of the financial stimulus was expected to boost people\'s purchasing power and accelerate the economy so that it would bring a positive impact on investors, he said. The government is also preparing a strategy to seize opportunities for economic recovery in 2021, one of which is through Covid-19 vaccination.
Separately, Finance Minister Sri Mulyani Indrawati emphasized that economic recovery relied much on the ability of the government to maintain the economic recovery and to contain the spread of Covid-19. The vaccination program is not the only way out, although it can bring positive sentiment. "It is true that economic recovery is determined by the Covid-19 vaccine. However, it is also determined by social protection policies, "he said.
KOMPAS/COKORDA YUDISTIRA
Decreasing boxes containing the Covid-19 vaccine distributed by PT Bio Farma to Bali Province in the Bali Provincial Health Office, Denpasar, Tuesday (5/1/2021).
In 2021, the government has allocated a total of Rp 403.9 trillion to finance the PC-PEN program. Of the total, Rp 25.4 trillion will be allocated for health sector, Rp 110.2 trillion for social protections, Rp 184.2 trillion for local governments, Rp 63,84 trillion to support MSMEs and corporate financing and Rp 20.26 trillion as incentives for business activities.
Be aware of uncertainty
The chief of investment officer at DBS Bank, Hou Wey Fook said, bright spots were starting to appear. The development of vaccines has brought a new hope that the economy would recover and the spread of Covid-19 could be controlled, he said.
However, the conditions ahead are still challenging and full of uncertainty. "With the end of uncertainties over the United States election and the development of the Covid-19 vaccine, global equity markets will be stronger in 2021," he said in a press teleconference Monday.
Stock markets around the world, including Indonesia, came under intense pressure during March-April 2020 when Covid-19 began to emerge. Theoretically, a market strengthening trend will occur after the stage of pessimism begins to change into a stage of skepticism, optimism, and then becomes euphoric.
However, according to Wey Fook, the sustainability of positive sentiment from the development of Covid-19 vaccines is very much determined by its effectiveness and future development. Therefore, the stock market in 2021 is expected to move to the stage of skepticism or between skepticism and pessimism.
This article was translated by Hendarsyah Tarmizi.
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