IPhones Help Brokerages Lure Young Indonesians to Internet Stock Trading
Indonesia’s biggest online brokerage is using Apple Inc. (AAPL)’s iPhones to attract young people to buy stocks in Asia’s best-performing market as fewer investors convert to Internet trading and the number of web users more than doubles in the next four years.
PT eTrading Securities, 40 percent-owned by Daewoo Securities Co., is courting students and 25- to 30-year-olds to fuel a targeted 15 percent growth in mobile trading this year because investors who haven’t moved online are less willing to try new technologies, President Director Jason Shin said.
“More and more young people with social networks are getting into online trading,” Shin said in an Aug. 23 phone interview from Jakarta. “Market growth is very slow, so we are now educating newcomers such as those from universities.”
The growth of mobile Internet, fueled by social networks run by Facebook Inc. and Twitter Inc., is likely to quicken as the number of Indonesians with online access jumps to 100 million by 2015 from 45 million currently, according to estimates from the national association of Internet services.
The Jakarta Composite index (JCI) has gained 3.7 percent this year, compared with a 13 percent drop in the MSCI Asia Pacific Index. That’s made Indonesia the best performer in Asia, amid near-zero interest rates in Europe and the U.S. and as rising inflation threatens growth in China, India and Brazil.
Most Expensive
The gains have pushed the Jakarta index’s valuation to 15 times estimated earnings, making it the region’s most expensive market. Still, overseas investors have bought a net $1.66 billion of shares in Southeast Asia’s biggest economy this year to Aug. 26, up 27 percent from the same period in 2010, according to data compiled by Bloomberg. The index will rise 12 percent to end the year to 4,300 points, Shin forecast.
“If online trading is already helping brokerages boost share transactions, mobile trading will benefit them even further,” Lily Widjaja, chairwoman of the Indonesian brokerage association, said on Aug. 25. “They can reach out to new customers in remote areas.”
eTrading was the country’s most-active brokerage last year, accounting for 6.1 percent of total transaction volume, data from the Indonesia Stock Exchange show. The company, whose clients make up 15 percent of the nation’s retail investors, introduced the country’s first mobile-trading applications for iPhones and other devices in December.
Using online platforms, investors can trade stocks without a broker, reducing costs. eTrading charges a transaction fee of 0.15 percent compared with the average rate of 0.2 percent at conventional brokerages, Shin said.
Lower Deposits
The company runs seminars on the stock market and trading for students, who can pay a deposit of 2 million rupiah ($233) to 3 million rupiah to open an account, he said.
PT Panin Sekuritas, Indonesia’s biggest listed brokerage by revenue, sets a minimum deposit of 25 million rupiah for its online trading service and PT MNC Securities, the second- largest, requires 5 million rupiah.
eTrading faces competition from rivals such as Panin Sekuritas and PT UOB Kay Hian Securities, a unit of Singapore- based UOB Kay Hian Holdings Ltd., which have branched into online trading to expand their client base amid the growth in Indonesia’s stock market.
Panin introduced its mobile-online trading service six months ago, Vice President Director Winston Sual said. UOB plans to offer the service in one or two months, said David Chang, a director at the Jakarta-based unit.
Internet Growth
Indonesia has 38 million Facebook users, the most in Asia, according to data from Internet World Stat. Still, only about 2 percent of the nation’s 237.6 million people have Internet connections at home, Marc Einstein, a Tokyo-based analyst at Frost & Sullivan Inc., who has advised carriers including NTT DoCoMo Inc. and Telstra Corp., said on March 7. Sixty percent of Indonesians get online through Internet cafes and other alternatives, he said.
Government plans for a 36,000-kilometer (22,369-mile) fiber-optic cable may more than double the number of web users by 2015 by increasing Internet penetration in the less-developed eastern parts of the country, Roy Rahajasa Yamin, chairman of the Indonesian association of Internet services provider, said on Aug. 25.
Phone operators such as PT Telekomunikasi Selular, Indonesia’s biggest, are driving the nation’s mobile Internet growth by breaking web services into more affordable, bite-sized pieces and offering them through smartphones. Devices such as iPhones and Research in Motion Ltd.’s Blackberries represented 12 percent of mobile-phone shipments in Indonesia last year, from 4.4 percent in 2008, according to market researcher IDC.
Indonesian Economy
The Indonesian economy will likely expand 6.5 percent this year, the fastest pace since the 1998 Asian financial crisis, President Susilo Bambang Yudhoyono said Aug. 16. The central bank kept its benchmark interest rate unchanged since February at 6.75 percent, 25 basis points above a record low, after July inflation slowed for a sixth month.
“When economies go up, people must invest somewhere,” Shin said. “We are educating the young. They start out very small but in three or five years when they get richer they will invest more and more and our market will grow.”
eTrading started in 2003 as Indonesia’s first online brokerage and the company has since grown its client base to 52,000 accounts, Shin said. That’s 15 percent of the total 346,864 accounts registered in Indonesia as of July, according to data from the nation’s central securities depository agency.
To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net
To contact the editor responsible for this story: Shiyin Chen at schen37@bloomberg.net
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