How Financial Brokerage Market Is Positioned In The Indonesia?
Indonesia, a country located in South-Eastern Asia, an archipelago between the Indian Ocean and the Pacific Ocean; has around 54 provinces with major cities being Jakarta, Surabaya, Medan, and Bandung. Deeply hit by the Asian Currency Crisis in 1997-98 to be a preferred investment hub by foreign investors in 2017-18, the country has come a long way in carrying out structural policy changes and deepening the roots of its financial markets. With the emergence of online trading facilities and implementation of T+2 settlement cycles in 2018, the brokerage industry has witnessed many changes aimed at improving the working mechanisms of the industry. The industry was observed in a slow-growing stage during the review period 2013-2018. The slow growth was attributed to factors such as placing of restrictions by the Federal Reserve on bond-buying transactions, capital flight from Indonesia’s economy, global weakening and increased interest rates by BI, elections and continued low awareness among the investors regarding the financial markets. However, the industry started recovering in 2016 and has been experiencing a positive growth owing to a stable positive economic outlook of Indonesia with an expected GDP growth rate of around 5.2%, an inflow of foreign investment, improve in the country’s rating, rising number of global strategic partnerships by the brokerage firms, low market capitalization and other related factors.
Indonesia Financial Brokerage Market Segmentation
By Type of Investment Category (Equity and Debt): Equity Investment Category captured the majority of the market share in terms of revenue contribution and frequency of transactions in Indonesia during 2018 owing to the high liquidity level, increased investment by asset managers of Mutual Funds and the rising number of IPOs in the country. In the equity investment category, stocks were the dominant category followed by Rights, Warrants, ETFs and REITs in terms of the revenue contribution to the industry. The remaining market share was captured by the debt investment category including government and corporate bonds during 2018.
Among Debt investment category, government bonds outperformed the traded value and frequency of transactions of the industry owing to the increased capital requirements for infrastructure building and restoring investor confidence after the 2013-14 downturn in the economy.
By Type of Brokerage Firm(Local Firms and Global Firms): During the year 2018, the revenue of Indonesia Financial Brokerage Market was dominated by the local brokerage firms owing to the established branch network, the company’s reputation among domestic investors, competitive pricing for online trading and quality of services offered by the firms. However, the entry of global brokerage firms and the increasing level of foreign portfolio investors have been contributing to the growth of global brokerage firms in the industry.
Snapshot On Sharia Financial Market Trading
Sharia investors constitute an important part of the market ecosystem. The low awareness regarding the financial markets coupled with a lack of availability of financial instruments has compelled the Sharia investors to opt for conventional sources of funding including commercial banks. However, with the rising awareness, expected to ease up of regulations by WAQF board, a number of financial instruments especially in the mutual fund’s segment, Sharia investors can directly contribute to the industry in the coming years.
Decision-Making Criteria For Consumers To Select A Financial Brokerage Firm
Financial Brokerage market is one of the highly sensitive markets where investors tend to shift to other brokers in case of sub-standard of the services delivered by the present brokerage firm. Hence, decision-making criteria’s plays an important role in the selection of a brokerage firm for both retail and institutional clients. Most important decision-making criteria are the company’s reputation, service portfolio, quality of services and transaction charges.
Comparative Landscape In Indonesia Financial Brokerage Market
The competitive landscape of the industry is characterized by a highly fragmented market structure with 104 brokerage firms competing majorly on the basis of transaction charges, service portfolio, and quality of services, firm’s reputation and online trading facilities for retail clients. In the year 2018, the majority of the market share in terms of the revenue contribution and the stock traded value was held by Mandiri Sekuritas which catered to ~% of the total industry revenue and total traded value of stocks.
What Is The Future Of Financial Brokerage Market In The Indonesia?
Over the forecast period 2018-2023, the Indonesia Financial Brokerage market is predicted to grow in terms of revenue because of the stable positive the economic outlook of the country, improve in the country’s rating, the anticipated increase in the foreign portfolio investments, increasing penetration rate among the domestic investors, rising number of IPOs, capital requirements of the government for infrastructure building and the boom in the mutual fund’s segment of the capital market.
Key Segments Covered:-
By Type of Investment Category:-
Equity Investment
Stocks
Rights
Warrants
ETFs
REITs
Debt Investment Category
Government Bond
Corporate Bond
By Type of Brokerage Firms:-
Local Firms
Global Firms
Time Period Captured in the Report:-
Historical Period – 2013-2018
Forecast Period – 2018-2023
Companies Covered:-
Mandiri Sekuritas
CGS-CIMB Sekuritas Indonesia
UBS Sekuritas Indonesia
Mirae Asset Sekuritas Indonesia
Indo Premier Sekuritas
Yuanta Sekuritas Indonesia
Macquarie Sekuritas Indonesia
Valbury Sekuritas Indonesia
Trimegah Sekuritas Indonesia Tbk
Citigroup Indonesia
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Indonesia Financial Brokerage Market
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