Archive for May, 2009

The Comparison of Capital Markets ASX, KLSE, and IDX

Posted in Uncategorized on May 5, 2009 by apriliawijayati

This paper address about capital market, which are:
1. developed capital market: Australia capital market ASX
2. emerging capital market: Bursa Malaysia KLSE
3. Indonesia capital market: Indonesia Stock Exchange IDX

AUSTRALIAN SECURITIES EXCHANGE
THE HISTORY
The ASX (Australian Stock Exchange Limited) was formed in 1987 by legislation of the Australian Parliament which operated in the state capital cities. (The brief table 1.1 of chronological history is presented in appendix.)

COMPANY LISTED
There are 2189 company listed in ASX from many industry groups, for example materials, consumer services, materials, food beverage & tobacco, real estate, and many more.

TYPES OF PRODUCT
• Shares
Shares also knwn as securities. The return is a share in the company’s profit that can be given as dividends or capital growth through the value of increasing shares.
• Futures & Options
This is used by trader or investors in a wide variety of investment to achieve a broad range: equities (index futures and options), interest rates (interest rate futures and options), energy, (coal, electricity futures and options), agriculture (wool futures and options) and environtment (emissions trading and water futures and options).
• REITS
There are 70 Australian Real Estate Investment Trusts (A-REITs).
• Infrastructure Funds
Infrastructure funds invest in public infrastructure assets. Examples include toll roads, airports, oil/gas pipelines and broadcasting towers. There are 24 companies listed.
• Warrants
A warrant is a form of derivative that derives its value from an underlying instrument. That gives holders the right to buy or to sell the underlying instrument.
• ETFs & ETCs
Exchange Traded Funds (ETFs) & Exchange Traded Commodities (ETCs) invest in a portfolio of securities that include Australian shares, international shares, commodities, listed property trusts, or a combination of asset classes and can provide investor with a diversified portfolio in the one transaction.
• Managed Funds
Managed Funds can provide exposure to a professionally managed and diversified portfolio of assets. These may include Australian shares, international shares, fixed income securities, unlisted private companies and specialist sectors.

• ASX Listed CFDs
A CFD (contract for difference) is an agreement between a buyer and a seller to exchange the difference in value of a contract, between when the contract is opened and when it is closed.
• Interest Rate Securities
An interest rate security is a security that pays a fixed or floating rate of return. This return can be in the form of interest or dividends.
• Energy & Environment
This is including thermal coal, natural gas, emissions trading, Australian electricity, etc.

INDEX ARE USED
There are 25 Australian market indices in ASX.
All Industrials, All Resources, S&P/ASX 300, S&P/ASX 200, S&P/ASX 100, S&P/ASX 50, S&P/ASX 20, S&P/ASX Small Ordinaries, S&P/ASX Small Industrials, S&P/ASX Small Resources, S&P/ASX Midcap 50, S&P/ASX Mid Cap Industrials, S&P/ASX Mid Cap Resources, S&P/ASX 200 Consumer Staples (Sector), S&P/ASX 200 Energy (Sector), S&P/ASX 200 Financial-x-Property Trusts (Sector), S&P/ASX 200 Financials (Sector), S&P/ASX 200 Health Care (Sector), S&P/ASX 200 Industrials (Sector), S&P/ASX 200 Information Technology (Sector), S&P/ASX 200 Materials (Sector), S&P/ASX 200 Telecommunication Services (Sector), S&P/ASX 200 Utilities (Sector).

MARKET INDEX FOR THE LAST 5 YEAR
Year S&P/ASX 200 Price Index
2004 4050.6
2005 4763.4
2006 5669.9
2007 6339.8
2008 3722.3

VOLUME OF TRANSACTION FOR THE LAST 5 YEAR
Year Transaction volume
2004 54,467,201
2005 64,313,679
2006 79,951,181
2007 92,714,486
2008 76,082,968

MARKET CAPITALIZATION FOR THE LAST 5 YEAR
Year Market capitalization $million
2004 10,267,410
2005 11,897,821
2006 14,809,649
2007 18,447,684
2008 14,878,035

BURSA MALAYSIA

THE HISTORY
In 1964, the Stock Exchange of Malaysia was established. With the secession of Singapore from Malaysia in 1965, the Stock Exchange of Malaysia known as the Stock Exchange of Malaysia and Singapore. In 1973, currency interchangeability between Malaysia and Singapore ceased, and the Stock Exchange of Malaysia and Singapore was divided into the Kuala Lumpur Stock Exchange Berhad and the Stock Exchange of Singapore. The Kuala Lumpur Stock Exchange formed on December 14, 1976. On April 14, 2004, the name changed to Bursa Malaysia Berhad.

COMPANY LISTED
There are 267 company listed in Bursa Malaysia.

TYPES OF PRODUCT
 Equities
Share capital, Fixed income securities (the holders are creditors who have no rights in the company beyond the payment of a fixed interest on their loans and repayment of the loans), Exchange Traded Fund (is designed to track performance of an index. It offers additional benefits of diversification and market tracking while retaining the features of convenience and flexibility of ordinary stocks), and warrants.
 Derivatives
Derivatives can be futures and options. The products served are: equity derivatives, commodity derivatives, and financial derivatives.
 ETF
ETFs invest in a group of stocks or bonds or other instruments.
 Offshore
The offshore exchange facilitates the listing and trading of various financial instruments and securities which are based on both conventional and Islamic principles.
 Islamic Capital Market (ICM)
ICM products are equities, derivatives, commodities, to debt securities, across all sectors and industries.

INDEX ARE USED
Bursa Malaysia index series are: Kuala Lumpur Composite Index (KLCI), Industrial Index, Technology Index, Sectoral Index (consumer product, construction, finance, industrial product, mining, plantation, and property).

MARKET INDEX FOR THE LAST 5 YEAR
Year KLCI (RM)
2004 907
2005 900
2006 1096
2007 1445
2008 877

VOLUME OF TRANSACTION FOR THE LAST 5 YEAR
Year Transaction volume (billion)
2004 123
2005 119
2006 216
2007 384
2008 155

MARKET CAPITALIZATION FOR THE LAST 5 YEAR
Year Market capitalization (RM billion)
2004 722
2005 695
2006 849
2007 1106
2008 664

INDONESIA STOCK EXCHANGE

THE HISTORY
The capital market in Indonesia was born before the Independence of Indonesia. The first stock exchange in Indonesia was established on 1912 in Batavia during the Dutch colonial era. In that era, the capital market grew slowly and even became inactive for a period of time because of many conditions, such as World War I and II, power transition from the Dutch government to Indonesian government, etc. It was reactivated in 1977, and it grew rapidly along with the support of incentives and regulations issued by the government. (The brief table 3.1 of chronological history is presented in appendix.)

COMPANY LISTED
There are 396 companies listed in Indonesia Stock Exchange. It is coming from many sectors, which are: bank, telecommunication, finance, pulp, food, building, etc.

TYPES OF PRODUCT
 Equities
Stock is investors’ most favorites investment instrument because it offers them an interesting return rate. There are two benefits the investor can get by buying or having stock, which are dividend (profit sharing given by company and comes from the income) and capital gain (the different between buying price and selling price.).
 Derivatives
Derivatives listed in the Exchange are financial derivatives, which derived from financial instruments such as stock, bond, stock index, bond index, currency, interest rate and other financial instruments. Financial derivatives are often used by Investors and Issuers to perform hedging on their portfolios.
 Syariah Products
Commercial paper represents the equity participation in a company. In syariah-based capital market, the equity participation can be done in companies, which business activities are not against the Islamic principles such as gambling, usury, and manufacturing prohibited things in Islamic Law like beer, etc.
 Bonds
Bond is a debt security, it is like a loan: the issuer is the borrower, the bond holder is the lender, and the coupon is the interest.
 Mutual Funds
Mutual Fund is defined as a mean to collect fund from the investment society to be invested in portfolios by the fund manager. It is an investment alternative for investors, especially for small investors and those who have less time and skill to count the risks of their investments. Mutual Fund is designed as tool to gather fund from public that have the capital, will to invest, but only have limited time and knowledge.

INDEX ARE USED
There are 17 market index used in IDX, which are Composite, AGRI, MINING, BASIC-IND, MISC-IND, Consumer, Property, Infrastructure, Finance, Trade, Manufacture, LQ4, JII, and MBX.

MARKET INDEX FOR THE LAST 5 YEAR
Year IHSG (Rp)
2004 1,000.233
2005 1,162.635
2006 1,805.523
2007 2,745.826
2008 1,355.408

VOLUME OF TRANSACTION FOR THE LAST 5 YEAR
year Volume of transaction (million)
2004 1,708.6
2005 1,653.8
2006 1,805.5
2007 4,225.8
2008 3,282.7
From the table shown, the trend of volume transaction is getting higher, even though in 2005 the amount was decreasing.

MARKET CAPITALIZATION FOR THE LAST 5 YEAR
year Market capitalization (Rp trillion)
2004 680
2005 801
2006 1249
2007 1988
2008 1076

COMPARISON:
COMPANIES LISTED
ASX 2189 companies
KLSE 267 companies
IDX 396 companies
The higher the company listed reflects that many companies are interested in capital market.
PRODUCTS
ASX shares, futures & options, REITS, infrastructure funds, warrants, ETF & ETC, CFD
KLSE equities, derivatives, ETF, offshore, ICM
IDX equities, derivatives, Syariah products, bonds, mutual funds
ASX provides more products than KLSE and IDX. Actually the vary the products from capital market is better off because ti provides investors many ways or choices to invest their money to the capital market.
RECENT 5 YEAR ACTIVITIES
It is including market index, transaction volume, and market capitalization. The market index reflects the market price. The increasing level of market index measure that the movement of market stock price is good. It means that the performance of companies is good as well. The increasing transaction volumes and market capitalization reflects that the trading activities run well, many people invest their money to the companies and many companies using capital market to fin more resources. The trends for ASX, KLSE and IDX are the same, which are, there is increasing level from 2004 to 2007, but in 2008 the level gets decrease, it might be happened because of there was world financial crisis.