Indonesia bourse mulls extending trading window by one hour

[JAKARTA] Indonesia’s stock exchange will consider extending trading hours, in its latest effort to draw foreign investors to South-east Asia’s biggest economy after heavy sell-offs earlier this year.

The local bourse could start trade at 8.00 am to appeal to Asian investors in earlier time zones, or end later at 5.00 pm to better reach European traders, Iman Rachman, president director of Indonesia Stock Exchange (IDX), said on Thursday (Jun 12). Extending timings on both ends is also being considered as part of an internal review that may conclude in three months, he said.

The Indonesian stock market currently operates in a seven-hour window of 9.00 am to 4.00 pm. Extended trading hours may help boost trading volumes and allow investors to respond to global events in real time. The consideration comes amid concerns over foreign outflows from local stocks and rising global uncertainties, and as investors debate the sustainability of a recent rebound in local equities.

The stock market entered into a technical bear market earlier this year before bouncing back in the current quarter. A series of routs prompted the IDX to defer the rollout of short-selling in stocks until September.

The exchange aims to implement short-selling in the fourth quarter, provided it gets a nod from the Financial Services Authority, Rachman said. It also plans to introduce “liquidity providers” to improve the market’s depth and create fair value for stocks, with 13 firms registering for the role, he said.

Overseas investors have pulled a net US$2.9 billion from Indonesian equities so far this year – the biggest withdrawal across South-east Asia in the period, according to data compiled by Bloomberg. Caution is rising over the nation’s economic outlook as recent trade and manufacturing data suggest momentum remains lacklustre.

Other points from the interview:

• IDX sees the first carbon trade from the forestry sector in the second half of the year, which would mark the next milestone after starting cross-border carbon trading in January.

• An existing upper trading limit is to protect investors against volatility, he said, addressing suggestions from some market players to scrap the limit. BLOOMBERG