Retail Investors Dominate the IDX: Where Are Institutional and Foreign Investors?

JAKARTA, investortrust.id – Indonesia’s stock market currently hinges on the growing clout of local retail investors, who have overshadowed both institutional and foreign players. This shift raises concerns about overall market resilience and spurs debate on how authorities might respond to preserve a healthy investment climate.

In January 2025, data from the Indonesia Stock Exchange (IDX) showed that retail investors accounted for 44% of transactions, followed by other local institutions at 26%, and financial institutions at 22%. These portions made up most of the daily transactions, which averaged around Rp 10.71 trillion, or about US$704 million, per day. Securities firms contributed merely 5% of the total, and corporations around 4%.

President Director of BRI Danareksa Sekuritas Laksono Widodo explained that the decline in institutional investors—particularly pension funds and insurance companies—resulted from a lack of clear regulations requiring them to diversify into equities. He noted that pension funds in other countries are often mandated to allocate a portion of their investments into stock portfolios.

“Last year, trades in the market were very sluggish for domestic institutions. BPJS TK, Indonesia’s Social Security Agency for Workers, did not enter, and Taspen, Indonesia’s Civil Servant Pension Agency, was also limited. Talking about mutual fund assets under management (AUM), it did not rise either. The only active participants were retail investors,” Laksono said on Wednesday, Feb 19, 2025, during a media visit to the Investortrust.id office in Jakarta.

According to Widodo, tepid interest from institutional investors signaled that the market might remain dependent on retail activity unless there are changes in policy. He also pointed to the dwindling number of Indonesian companies listed in the MSCI (Morgan Stanley Capital International) indices. MSCI, which assesses equity market performance worldwide, reduced Indonesia’s weight in 2024, bringing the total Indonesian constituents in MSCI Global Standards down to 17, effective as of March 2025, compared with 28 in 2019.

“If you look at why foreign brokerages have pulled out of Indonesia, it is partly because Indonesia’s market has become marginal. That is the reality. The size of the market is the issue, because there has been no major catalyst so far to make Indonesia a leading equity destination,” Laksono remarked.

Head of Equity Research at BRI Danareksa Sekuritas Helmy Kristanto added that higher stock trading activity, compared with fixed-income investments, often indicates a country in growth mode. Conversely, if equity investments stagnate while fixed-income activity grows, it suggests the economy may be flattening out.

“A simple example is the United States. Ever since the probability of Donald Trump’s victory rose, the S&P 500 kept hitting all-time highs, indicating improved growth expectations. That is different from bond yields, which began to tighten,” Kristanto said.