DEFINITION of 'Indonesia Stock Exchange (IDX) .ID'

The Indonesia Stock Exchange (IDX), created by the merger of Jakarta Stock Exchange (JSX) and the Surabaya Stock Exchange (SSX), handles securities transactions in the country.   The JSX was Indonesia's first stock exchange, founded in 1912 for the interest of the Dutch East India Company. The Jakarta Stock Exchange was closed during parts of World Wars I and II. When it reopened in 1952, the only exchanged security was the Indonesian government bond. The exchange became inactive from 1956-1977, and despite being reactivated in 1977, trading activity continued to be slow, with only a few dozen companies listed.

BREAKING DOWN 'Indonesia Stock Exchange (IDX) .ID'

Regulatory changes between 1988 and 1992 improved trading activity. The Exchange introduced its automatic trading system in 1995 and began to implement remote trading in 2002. In 2007, the Jakarta Stock Exchange merged with the Surabaya Stock Exchange to form the Indonesia Stock Exchange.

The Exchange Today

With listed stocks having a market capitalization of over $350 billion, the exchange has seen increasing trading volume. "IDX celebrated a stellar year in 2016 by recording growth in almost every aspect of the capital market including market capitalization, amounts of equity and debt capital raised during the year, and highest peaks ever recorded for shares transaction in terms of average daily trading value, volume and frequency," IDX said in its 2016 annual report.

"In addition, IDX also achieved record growths in average daily trading throughout 2016. These growths reflected a more active market as more investors flock into the market," the report stated. "Between 2006 and 2016, IDX posted a market index growth of 194%, the highest rate among leading major bourses in the world."

Nearly half of the 366 equities posted growth of more than 10%, while 31 equities had extraordinary growth of more than 40%. "IDX has never stopped to carry out initiatives to promote and fuel its growth. These initiatives range from developing capital market professionals to strengthening market infrastructures, enhancing trade facilities and engaging in international collaborations."

The exchange bills itself as "The Best Performing Stock Exchange for Long-term Investors in the world. Essentially, IDX had the highest investment return of all major bourses in the world for the period of 2006 to 2016."

Emerging markets like Indonesia have their own set of additional risks for investors. Emerging markets generally do not have the level of market efficiency and strict standards in accounting and securities regulation to be on par with advanced economies (such as the United States, Europe and Japan), but emerging markets do typically have a physical financial infrastructure, including banks, a stock exchange and a unified currency.

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