Jakarta Stock Exchange, Market Overview

JAKARTA STOCK EXCHANGE

Introduction

to the Indonesian Syariah Capital Market

Kandi Sofia S. Dahlan

The Jakarta Stock Exchange

“INDEXING STRATEGIES ASIA 2007”

Hong Kong

27-28 November 2007


The Issuance of the

List of Syariah-Compliant Securities by

the Indonesian Capital Market Supervisory Board

• Starting Aug 31-2007

– All securities and other portfolio investments products claiming to comply with the Syariah rules, must adhere to the guidelines issued by the Indonesian SEC - the Indonesian Capital Market Supervisory Agency (BAPEPAM-LK).

– The List is created and maintained under the supervision and guidance of the The Indonesian Board of Islamic Scholars

– The rules also apply to Syariah indexes.

– So far, the Jakarta Islamic Index (JII or JAKISL), which is published and maintained by the Jakarta Stock Exchange, is the leading benchmark widely used by the Indonesian capital market industry.


List of Syariah-compliant Securities:

The Selection Process

Syariah Core Business Selection. The following business sectors are excluded :

1. Gambling and any other games that are categorized as gambling.

2. Conventional financial institutions, including: conventional banking institutions

and insurances.

3. The productions, distributions, provisions and tradings of products and

services that are prohibited by Islamic laws.

Syariah Financial Criteria Selection.

1. Listed Companies or Public Companies must pass the following syariah

financial criteria:

2. The ratio of interests-bearing debts to total equities must not exceed 45%:55%

3. The total of interest incomes and income from non-syariah business activities

must not exceed 10% out of total revenue.


Jakarta Islamic Index

� The Jakarta Islamic Index (JII or JAKISL) was launched on July 2000, with the goal of providing the market with stocks that comply with the Islamic Sharia’ investment guidelines.

� Until the issuance of the List of Syariah-Compliant Securities became centralized in the Indonesian SEC in August 2007, the selection process for the Jakarta Islamic Index was done by a Sharia Supervisory Board, which was supervised by the The Indonesian Board of Islamic Scholars.

� The Index consists of 30 stocks that have passed the Syariah and the liquidity selections. � The Jakarta Islamic Index is reviewed twice a year, every January and July.

� During reviews, stocks that no longer meets any of the selection criteria are replaced.

� To ensure that the Jakarta Islamic Index follows the Syariah criteria, the core business activities of every Jakarta Islamic Index constituents are closely monitored.

� JII or JAKISL now serves as one of the foremost benchmark for syariah investment products in Indonesia.


Jakarta Islamic IndexSelection Process

Shariah Compliance Filter

1. Shariah compliance screening is carried out by the Shariah

Supervisory Board every 6 months.

2. Since September 2007, this step is replaced by referring to the List of the Syariah

compliant Securities, published by the Indonesian SEC

Liquidity Filter

1. Stocks have been listed at the Jakarta Stock Exchange for 3 months minimum.

2. From the list, the top 60 stocks with the largest market capitalization are selected for the next screening.

3. In the last step, 30 stocks with the highest average trading values are selected. The trading values are based on the performance during the previous 12-month period.


Tables and Graphs


The Constituents Of The Jakarta Islamic IndexThe Constituents Of The Jakarta Islamic IndexJuly July –– December 2007 PeriodDecember 2007 Period

COMPANY NAMECOMPANY NAMECODECODENo.No.

Central Proteinaprima TbkCPRO9.

Astra Agro Lestari TbkAALI1.

International Nickel Ind .TbkINCO12.

Indofood Sukses Makmur TbkINDF13.

Indah Kiat Pulp & Paper TbkINKP14.

Indocement Tunggal Prakasa TbkINTP15.

Mobile-8 Telecom Tbk.FREN11.

Ciputra Development TbkCTRA10.

Bumi Resources TbkBUMI8.

Bakrie Telecom TbkBTEL7.

Bakrie & Brothers TbkBNBR6.

Berlian Laju Tanker TbkBLTA5.

Astra International TbkASII4.

Apexindo Pratama Duta TbkAPEX3.

Aneka Tambang (Persero) TbkANTM2.

� 241 stocks are passed as shariah-compliant.

� From this universe, based on size, 30 stocks are used to construct the index

COMPANY NAMECOMPANY NAMECODECODENo.No.

Telekomunikasi Indonesia TbkTLKM27.

Semen Gresik (Persero) TbkSMGR25.

Indosat TbkISAT16.

PP London Sumatera TbkLSIP19.

Timah TbkTINS26.

Truba Alam Manunggal Engineering TbkTRUB28.

United Tractors TbkUNTR29.

Unilever Indonesia TbkUNVR30.

Semen Cibinong TbkSMCB24.

SMART TbkSMAR23.

Tambang Batubara Bukit Asam TbkPTBA22.

Perusahaan Gas Negara (Persero) TbkPGAS21.

Medco Energi International TbkMEDC20.

Lippo Karawaci TbkLPKR18.

Kalbe Farma TbkKLBF17.


JSX Composite Stock Price Index and Jakarta Islamic IndexJSX Composite Stock Price Index and Jakarta Islamic Index2000* – October 2007**

*July (launching date)

** as of November 19th, 2007

-100%

0%

100%

200%

300%

400%

500%

600%

2000 2001 2002 2003 2004 2005 2006 2007

JSX Composite Stock Price Index



Opportunity in equity funds

Performance comparison: JII vs JCI


Jakarta Composite Index Jakarta Composite Index vsvs Jakarta Islamic IndexJakarta Islamic Index

2001 – November 2007**

In USD

In IDR

19 Nov 2007

2006

2005

2004

2003

2002

2001

YearYear

665.18%575.15%Change 2001 to 19 Nov 07 (%)

9,355164.0291,000.233

9,840199.7491,162.635

8,90567.318424.945

8,447118.952691.895

9,025311.2811,805.523

740.88%640.60%

9,288469.5392,646.813

10,34561.363392.036

USD USD

RateRate

Jakarta Jakarta

Islamic Islamic

IndexIndex

Jakarta Jakarta

Composite Composite

IndexIndex

In IDR, JII Performance In IDR, JII Performance

better than the JCIbetter than the JCIIn USD, JII returns are much better compared to JCI, In USD, JII returns are much better compared to JCI,

since there are gains arising from the exchange rate since there are gains arising from the exchange rate

differences between IDR and USDdifferences between IDR and USD

**as of Novermber 19, 2007


Development of The Jakarta Islamic Index Performance

2001* – November 2007**

8.48

87.73

61.36

2001

113.23

1,051.68

469.54

Nov 07**

1,235.3%10.34 21.05 28.21 40.21 68.72 Market

Capitalization (in

Billion USD)

1,098.8%,92.07177.78263.86395.65620.17Market

Capitalization (in

Trillion Rp)

665.2%67.32 118.95 164.03 199.75 311.28 Jakarta Islamic

Index

Change20022003200420052006

* Starting from July 2007 launching date

** 19 November 2007


Market Capitalization (JSX and JII),Market Capitalization (JSX and JII),

JSX Composite Index and Jakarta Islamic IndexJSX Composite Index and Jakarta Islamic Index

2001* – November 2007**

*July (launching date)

** as of November 19th, 2007

Market

Capitalization

(Trillion Rp)

Index

Growth

-

250

500

750

1,000

1,250

1,500

1,750

2,000

2001 2002 2003 2004 2005 2006 2007

0%

100%

200%

300%

400%

500%

600%

700%

800%

Market Capitalization of JSX

Market Capitalization of JII

JSX Composite Index



2%11,150.85245.010.11162182006

2%9,969.48203.460.11153172005

1%8,079.15120.240.07145102004

1%7,517.4887.420.0413562003

0%4,229.570.000.0010002002

0%3,044.460.000.009402001

0%3,000.250.000.009102000

%ConventionalSyariah%ConventionalSyariah

Comparison of Value of Syariah Bonds vsValue of Conventional Bonds

(in Milion USD)

Ratio of Numbers of Syariah Bonds vs

Conventional Bonds

Year

Comparison of Numbers and Value:

Syariah vs Conventional Bonds

Source: Annual Report 2006 – the Indonesian Capital Market Supervisory Agency


1.4%5,648.3480.206.1%380232006

2.0%2,786.5256.875.5%310172005

0.3%10,176.4730.743.7%21582004

0.1%8,204.997.912.2%18042003

0.1%5,214.073.302.3%13132002

0.3%769.592.501.9%10822001

1.1%230.642.632.1%9422000

% of totalConventionalSyariah

% of totalConventionalSyariah

Comparison of Value of SyariahMutual Funds vs Value of

Conventional Funds (in Milion USD)

Ratio of Numbers of SyariahMutual Funds vs

Conventional Mutual Funds

Tahun

Comparison of Numbers and Value:

Syariah vs Conventional Mutual Funds

Source: Annual Report 2006 – the Indonesian Capital Market Supervisory Agency


Brief Information On The

Indonesian Syariah-Finance Industry


Syariah-Finance Industry in Indonesia Brief Background


Development of Indonesian syariah fundMarket potential


Development Of Indonesian Syariah Mutual Funds (1)


Development of Indonesian Syariah Mutual Funds (2)






Indonesia Syariah Fund IndustryIdentification of SWOT


Indonesia Syariah Fund IndustryIssues And Future Challenges


Thank You

Date post:	08-May-2015
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