Indonesia Stock Trading Delayed as Members Unable to Connect

The Indonesian stock exchange delayed trading after almost a third of its members failed to connect to the bourse’s system. Trading resumed about 1:30 p.m. according to Samsul Hidayat, the bourse’s director of trading and membership.

Only 84 of 114 bourse members were able to connect this morning, Uriep Budhi Prasetyo, director of surveillance and compliance, said by phone today. Bourse members have a seat on the exchange and can trade directly. Hidayat said by phone that he was in a meeting with his team to review what happened. The benchmark Jakarta Composite Index rose less than 0.1 percent to 4,147.33 as of 3:03 p.m. local time.

The exchange experienced an hour-long disruption in April 2009 when a cable used for sending transaction data malfunctioned after a buy order overran its capacity, the bourse said at the time. In October 2008, the bourse halted trading for three days following a 10 percent plunge in the key stock index.

“It creates a reputation problem,” Siswa Rizali, who helps manage about $367 million at PT Andalan Artha Advisindo Sekuritas, said by phone from Jakarta. “It happened before. The stock exchange has to convince people that they have the capability to provide smooth transactions.”

The disruption won’t deter foreign investors lured by the Indonesia’s economic growth, Samsung Asset Management Co.’s Alan Richardson said. Overseas funds bought a net $935.2 million of Indonesian equities this year to Aug. 24, on course for three straight years of purchases, data compiled by Bloomberg show. Foreign investors sold $21.3 million of shares on Aug. 24, snapping nine days of buying, the data showed.

Attractive Growth

“It’s a temporary glitch,” Richardson, a Singapore-based fund manager who helps oversee $82 billion, said by phone. “It won’t scare foreign investors away. Investors are attracted by 6 percent to 7 percent gross domestic product growth which is expected to sustain next year, and 20 percent corporate earnings growth.”

The Jakarta Composite Index has tripled since the end of 2008, driven by the nation’s economic prospects. The stock gauge gained 8.4 percent this year, compared with the MSCI Emerging Markets Index’s 5 increase. The Indonesian index trades for 14.9 times estimated profit, compared with its three-year average of 13.6, data compiled by Bloomberg show.

The government plans to increase capital spending by 15 percent next year to boost infrastructure and support growth, President Susilo Bambang Yudhoyono said in his annual budget address on Aug. 16. Economic growth is forecast to accelerate to 6.8 percent in 2013 from an estimated 6.3 percent to 6.5 percent this year, he said.

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