Sharia-stock traders flat despite increase in products: IDX

The Indonesia Stock Exchange (IDX) has reported an increase in sharia-based products to 318 stocks or 61 percent of listed stocks, accounting for Rp2.6 quadrillion (US$195 billion) of the capital market. However, the few sharia-based investors remain flat.

IDX director Nicky Hogan said there were 318 sharia stocks or 61 percent of the total 523 stocks in the market. The market capitalization is equal to 53 percent of the total market share. Unfortunately, there are only 4,908 single investor identifications (SIDs) who are categorized as sharia investors, or 1 percent of the total 477,000 SIDs.

"This year, we're aiming for an additional 5,000 sharia investors. We must admit that the conventional investors are growing faster, totaling 434,443 at the end of 2015, up by 40,000 in just three months," he said on Monday in Jakarta.

Sharia investors, he continued, wanted their trading accounts to be opened in a sharia bank, which created another problem. "Currently there are only two sharia banks operating as administrators," Indonesia Central Securities Depository (KSEI) director Frederica Widyasari Dewi told thejakartapost.com.

Those two sharia banks are Bank Syariah Mandiri and BCA Syariah, which just joined this year following Bank Syariah Mandiri in 2015.

Moreover, holding sharia stocks is not simple at the operational level, as the sharia stocks list (DES) changes every six months following periodic review. Several sharia stocks may lose their status after the review, forcing sharia-investors to sell them regardless of gain or loss.

To get around such problems, securities companies make a double-trading account to prevent the forced-sell. "If they buy stocks that are suddenly kicked out from the sharia list, the gains will be transferred to a conventional account, while the sharia profit goes to a sharia investor account," Frederica said.

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