Capital Market Year-End Reflection: Domestic Investor Domination Keeps Fundamentals Sturdy

JAKARTA - Coordinating Minister for the Economy Airlangga Hartarto said that the government's efforts to improve the performance of the financial sector through a capital market deepening strategy had a positive effect.

According to him, this can be seen from the number of capital market investors in 2021, which has increased significantly to 7.38 million or jumped 90.32 percent compared to the 2020 period. In addition, an encouraging trend comes from the increase in the number of companies conducting Initial Public Offerings. (IPO) which is as many as 54 new entities this year.

“Currently, the share of ownership of Indonesian capital market assets is dominated by domestic investors. This situation strengthens our capital market fundamentals against external risks that arise throughout 2021. This large portion on the domestic side has also contributed to reducing the taper tantrum that has occurred in the second semester of 2021, "he said when quoted on Friday, December 31.

Airlangga added, the majority of capital market investors are also dominated by people in the millennial age category or under 30 years. This category is considered to have relatively high financial and digital literacy so that it absorbs new information more quickly.

Furthermore, Airlangga explained that the government has provided incentives for lower corporate income tax rates of 19 percent for domestic corporate taxpayers in the form of public companies. The effort was taken to encourage an increase in the number of IPOs in the Indonesian capital market.

“Controlling the pandemic remains the main key in driving economic recovery next year for various sectors, including in the capital market. Investors' expectations for economic recovery have been reflected in the development of the capital market throughout 2021," he said.

To note, the Composite Stock Price Index (JCI) increased to reach the level of 6,500 towards the end of this year.

Previously on November 22, 2021, the growth of the JCI had broken a new record, namely at the level of 6,723.39. The return on the Indonesian capital market can also reach 10 percent year-to-date (ytd). Meanwhile, the increase in the JCI helped lift the rupiah exchange rate back to its pre-pandemic level.

"Coordination and synergy between the government and all stakeholders need to be strengthened in maintaining the optimism of market players in 2022. Hopefully all the strategies we have carried out together this year can be a provision to face next year," concluded Coordinating Minister Airlangga.