Last year’s economic crisis saw fear and panic spread all the way from Wall Street to the halls of the Indonesia Stock Exchange in Jakarta.
Barlef, a stockbroker with Panin Sekuritas, witnessed the event firsthand. He walks us through a day in the life of a stockbroker, gives us some picks for 2010 and tells us why Indonesia’s economy is paving the way for Asia’s recovery.
Can you describe your day as a stockbroker?
The routine would probably bore most people. I wake up at 5 a.m. and I’m usually in the office by 6:45 a.m., even though things officially start at 8:30 a.m. I review the news, hold a briefing with my team and start calling clients before the market opens. At noon, I have an hourlong lunch break, and then return to my computer to do research, buying and selling until the end of trading hours. Then, after work, I get together with my associates to discuss the day until 6 p.m. I’ve been doing the same thing for years; maybe it’s going to change once I have a child [laughs].
What kind of clients do you have?
Individuals and pension funds. I hold six pension funds from institutions, two non-institutions, and the rest is made up of individuals. I have around 90 accounts altogether. I have to call the active traders and big clients daily to report. Those who doesn’t trade much have to call me, unless a warning signal appears on their portfolio investments, then I will notify them.
Where does most of the investment money come from?
You’d be surprised because individuals can be the biggest players, unless you hold pension funds from big players like Jamsostek, Jasa Marga or Telkom. Some individuals in Jakarta can “enter” [buy] at Rp 20 to 30 billion [$2.1 million to $3.2 million] a trade, while institutions may only invest Rp 500 million or Rp 1 billion.
What sort of profit can you make for your clients?
That’s up to them; it depends how much they want. If a client wants to sell at 5 percent, it’s their decision. Sometimes, when the market is not stable, after a gain of 1.5 percent in four days, they’ll sell. Pension funds usually target a 16 percent gain annually. If the market is bullish, 10 percent a week is possible, but you have to understand that this should be looked at as a long-term investment, because it’s volatile. I can guarantee that if you invest for more than two years, you will see an increase.
So what stocks do you recommend?
In 2010, I would choose consumer goods, such as Indofood, and real estate stocks like Ciputra Group.
How bad was last year’s crisis?
We felt the crisis, definitely. The Jakarta Composite Index dropped from 2,800 to 1,100. In percentage terms it fell almost as much as the Dow Jones. But today the Dow is still around 10,000, and we’re already at 2,600. I think we recovered quickly because our economy doesn’t export much compared to others. Countries that export heavily, such as Japan, got hit the hardest.
Let’s go back to the crisis in 1997-98. How does that compare to 2009?
That time the crisis only hit Asia, last year it was the world. Back then we got backing from the Europeans and Americans. I watched last year’s crisis from a front-row seat. It was scary. I saw Bumi fall from Rp 8,000 to Rp 400; many investors lost a lot of money. But overall, last year many other countries got it worse. Back in ’98, we got hit hard.
Is this the best time to buy?
Yes, of course, but many people are still scared to invest. I have a client who bought Bumi at Rp 800, now it’s Rp 2,700 per share. It’s like discovering treasure [laughs]. But you have to be patient, that’s the key. Buy when the market is down and don’t sell immediately when it rallies, sell after a few days.
How much commission do you make on each trade?
That depends on the client. A big client may use a couple of different brokers, so, obviously, they would compare and negotiate. The Jakarta Stock Exchange sets maximum and minimum commissions. The standard is 0.6 percent or 0.7 percent, buying or selling. But for a big investor it will be around 0.2 percent to 0.5 percent. If you are playing with Rp 100 million, you can really see the difference, that’s why it’s negotiable. But if you only trade Rp 10 million, 0.7 percent doesn’t matter.
Are there any scams that we should be aware of?
Beware of stock tidur . This is an inactive stock, and there are lots of them in Indonesia. There’s one, which I can’t name, but it’s listed and it’s fake. My friend investigated a company like that. He went to the office outside Jakarta and only found a typewriter and two employees. Basically these stocks only move up for three days, then go down again and stay at that price for six months or a year. If you are a day trader, buying or selling any stock that moves that day, you might get caught buying this stock high and stuck with it as it goes down. The bandar [person on the other side] will patiently wait until you sell, so he can collect his stock again and make a profit.
Is being a stockbroker a good job?
It’s hard to say. Last year even the top brokers had a painful year because there were no transactions. I’m “in-house” so I still earn a salary, but there were some commission-based guys who were only getting paid $30 a month. But then, after the recovery, they could go out and buy a new car [laughs].
Barlef was talking to Iwan Putuhena
Original interview was published in The Jakarta Globe
Picture by Iwan Putuhena
for more information visit www.paninsekuritas.co.id