Jakarta, CNBC Indonesia – Domestic institutional investors are still considered difficult to develop, even though the presence of these investors is very much needed for the development of the Indonesian capital market.
Especially in recent times due to the pandemic, institutional investors have been dragged back into the financial market, especially stocks.
President Director of PT Schroder Investment Management Indonesia (Schroders), Michael Tjandra Tjoa said that the placement of funds from institutional investors, especially pension funds (dapen) was arguably underdeveloped since 2014.
This is reflected in the investment value of pension funds in shares of IDR 28 trillion at that time, while in 2020 it was only worth IDR 32 trillion.
“Recently, there are many institutional investors, one, as a result of capital market expectations, market expectations are less profitable due to the pandemic. So we see institutional investors stop investing, stop, no one has added their portfolio to the capital market,” said Michael at the Capital Market Summit. & Expo 2021, Friday (15/10/2021).
“This is also reflected in the statistics on the number of mutual fund investors in 2014 as well as the stock market from the Dapen that did not develop significantly. In 2014 the investment in shares from the Dapen was only Rp. 28 trillion and in late 2020 it was only Rp. 32 trillion, and this may be due to more. market movement,” he continued.
Michael highlighted a number of difficult obstacles to increasing investment invested by institutional investors, especially institutions owned by SOEs and the government.
The first is the rigidity of the regulations laid down, moreover there are financial consequences to the laws enacted against the managers of these funds, especially pension funds.
This rule is considered to make investment placements by state-owned depositors or government-owned institutions less developed and inflexible.
“For me, I see that the existing regulatory rules must be updated to be more up to date with the current situation so that the managers of the BUMN Dapen or government participation are more flexible. They are indeed investments that can gain or lose, can be realized or unrealized. Hopefully not like in the old rules which are always questioned and disputed,” he explained.
Second, the lack of number of public companies (issuers) with large market capitalization.
According to Michael, currently the number of publicly listed companies on the Indonesia Stock Exchange (IDX) continues to grow, even in the last two years the addition is quite high despite the current market conditions.
However, unfortunately most of these companies are not attractive to institutional investors with large managed funds. This is because the size of a company will determine the liquidity of its stock transactions, and this is one of the benchmarks for institutional investors to invest.
Third, the flexibility for institutional investors belonging to BUMN or the government to be able to invest their funds in accordance with market trends.
He explained, this year one large public offering of shares is PT Bukalapak.com, in terms of size, it is assessed according to the criteria of institutional investors.
However, unfortunately for institutional investors belonging to SOEs and the government, there are obstacles that cannot invest in loss-making companies. In fact, currently companies that have the potential to provide large sizes, the majority are technology companies that are still listed in the ‘red book’.
Thus, if these rules are not adjusted, these investors may not be able to keep up with market trends. Moreover, next year there are expectations of a public offering of shares from even bigger technology companies.
“But if they are still losing money and there are some rules that limit institutional investors from making investments, it becomes a detrimental factor for domestic institutional investors to be able to invest,” he explained.
“I know that not all funders or financial institutions are allowed to invest in loss-making companies, there can be a certain amount. But this is a concern because supervisors and founders why invest in places where they lose, why and how the rules are and this is a challenge.”
However, he continued, good fund management is also another criterion that must be met by institutional investors. Although the opportunity to be more flexible has been given, customer trust is also a benchmark in itself.
“Another thing that we see and pay attention to is that institutional investors, such as fund managers, must again look at internal criticism that institutions must also look at how they move and invest in the interests of investors, not for their own interests,” he said.
Moreover, in recent times, the confidence of individual investors has decreased due to several cases involving institutional investors and brokers.
“This must be corrected, given direction and of course must be monitored better with better supervision directed before the incident escalates so it can be handled. So trust for them does not decrease,” he said.
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