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Jakarta Stock Exchange

Definition

The Jakarta Stock Exchange, now known as the Indonesia Stock Exchange (IDX), is the primary securities market in Indonesia. Established in 1912, it facilitates the trading of stocks, bonds, and other financial instruments. The IDX, based in Jakarta, aims to bolster Indonesia’s capital market, providing a platform for companies to raise funds and investors to grow their wealth.

Phonetic

The phonetics of the keyword “Jakarta Stock Exchange” would be:/ʤəˈkɑrta stɒk ɪksˈʧeɪndʒ/

Key Takeaways

  1. The Jakarta Stock Exchange (JSX) is now known as the Indonesia Stock Exchange (IDX) after its merger in 2007 with the Surabaya Stock Exchange (SSX).
  2. The Indonesia Stock Exchange is a crucial part of the Indonesian capital market, serving as a platform for listed companies to raise funds and investors to trade stocks, bonds, and other financial instruments.
  3. Indonesia Stock Exchange is supervised and regulated by the Indonesia Financial Services Authority (OJK) and operates under a fully electronic trading system ensuring transparency, efficiency, and accessibility for both domestic and international investors.

Importance

The Jakarta Stock Exchange (now known as Indonesia Stock Exchange or IDX) holds significant importance in the business and finance world as it serves as the primary marketplace for trading securities and stocks, not only in Indonesia but the entire Southeast Asian region. Being the largest stock exchange in the country, it plays a critical role in the economic growth and development of Indonesia by providing individuals and corporate institutions with valuable investment opportunities, facilitating the capital raising processes for local businesses, and enhancing financial market transparency. Additionally, the IDX actively contributes to the global market and serves as an essential indicator of the Indonesian economy’s overall health, which is important for both domestic and international investors, as well as related stakeholders.

Explanation

The Jakarta Stock Exchange (JSE), now known as the Indonesia Stock Exchange (IDX), serves an essential purpose in Indonesia’s financial and economic landscape. As the primary securities exchange in the country, the JSE provides an organized platform for the trading of stocks, bonds, and other financial instruments. By facilitating the exchange of financial securities, the JSE allows companies to raise capital through the issuance of shares, promotes secondary market trading, and acts as a vital component in the mobilization of financial resources for investment opportunities in Indonesia. This mechanism contributes to fostering economic growth, creating employment opportunities, and encouraging investment flows.

Moreover, the JSE’s role expands beyond enabling companies and investors to trade securities: it also helps maintain market integrity, transparency, and investor confidence. The exchange imposes rules and regulations that publicly traded companies must follow, ensuring that participants adhere to a high standard of corporate governance and information disclosure. The JSE achieves this by monitoring listed companies’ compliance with financial reporting and corporate actions.

Furthermore, the exchange enforces trading rules and guidelines that help prevent market manipulation and fraud, thereby safeguarding the interests of both retail and institutional investors. As a result of these measures, the JSE ultimately serves as a crucial platform to channel financial resources into the business sector and a foundation contributing to Indonesia’s overall economic dynamism and development.

Examples

1. The Jakarta Stock Exchange Composite Index (JSXCI): The JSXCI, now known as the Indonesia Stock Exchange (IDX) Composite Index, is a primary indicator of the Indonesian stock market performance. It is a benchmark for investors and traders to measure their portfolio performance and make investment decisions. The Jakarta Stock Exchange Composite Index is composed of all listed companies in the stock market, reflecting their performances and giving an overview of the market’s overall trend.

2. The 2000 Jakarta Stock Exchange Bombing: On September 13, 2000, the Jakarta Stock Exchange building faced a terrorist bombing attack, which resulted in 15 casualties and several injured. The attack affected the stock market as trading was suspended for a few days. However, the bombing did not significantly disrupt the overall functioning of the market, and it resumed normal operations relatively quickly, showcasing the resilience and dedication of the Indonesian financial sector.

3. Initial Public Offerings (IPOs) on the Jakarta Stock Exchange: A notable example relating to the Indonesian stock market is the IPOs that have taken place on the exchange. Numerous Indonesian companies have chosen to go public on the Jakarta Stock Exchange to raise capital and expand their operations. For instance, one of the most prominent IPOs on the exchange was Bank Rakyat Indonesia (BRI) in 2003, which raised approximately $34.5 million.

Another recent example is the successful IPO of Bukalapak, an e-commerce platform, in August 2021, which raised $1.5 billion in the largest-ever IPO in the Indonesian capital market.

Frequently Asked Questions(FAQ)

What is the Jakarta Stock Exchange?

The Jakarta Stock Exchange, officially known as the Indonesia Stock Exchange (IDX), is the primary stock exchange in Indonesia where securities like stocks, bonds, and various other financial instruments are bought and sold. Founded in 1912, the stock exchange is situated in Jakarta, the capital of Indonesia.

Which companies are listed on the Jakarta Stock Exchange?

The Jakarta Stock Exchange has more than 600 listed companies representing a diverse range of industries, such as banking, telecommunications, mining, agriculture, automotive, and more. Major companies listed on the exchange include Bank Central Asia, Astra International, Bank Rakyat Indonesia, Telkom Indonesia, and Unilever Indonesia, among others.

What are the trading hours of the Jakarta Stock Exchange?

The Jakarta Stock Exchange operates from Monday to Friday, excluding public holidays. The trading hours are divided into two sessions: the first session starts at 9:00 AM local time and ends at 12:00 PM; the second session begins at 1:30 PM and concludes at 4:00 PM local time.

What is the main index of the Jakarta Stock Exchange?

The main index of the Jakarta Stock Exchange is the IDX Composite Index (formerly known as the Jakarta Composite Index or JCI). The index measures the overall performance of all listed stocks on the exchange and serves as a benchmark to gauge market trends and the Indonesian economy’s health.

How can an investor participate in the Jakarta Stock Exchange?

To invest in the Jakarta Stock Exchange, an investor needs to open a stock trading account with an Indonesian stockbroker which is registered as a member of the IDX. Foreign investors are also allowed to trade in the market through a licensed intermediary, such as an international broker or bank, by opening an account with them.

What are the regulatory bodies governing the Jakarta Stock Exchange?

The Jakarta Stock Exchange is regulated by the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan or OJK) and IDX as a self-regulatory organization. These organizations ensure fair trading practices, investor protection, and maintain transparency and integrity in the Indonesian capital markets.

Related Finance Terms

    • Indonesia Stock Exchange (IDX)
    • Emerging markets
    • Equity trading
    • Indonesian Capital Market
    • Market capitalization

Sources for More Information

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