Danantara Indonesia CEO Rosan Roeslani has highlighted a significant investment opportunity within the Indonesian stock market, noting that banking sector shares currently listed on the Indonesia Stock Exchange (IDX) are undervalued. With many stocks trading at a Price to Book Value (PBV) ratio of less than 1, Roeslani suggests that current market prices are well below their fair value.
In a normal market environment, banking sector stocks typically command a PBV ratio of 2 to 3 times. “If you look at the banking sector, the Price to Book ratio is currently below 1. Given that these stocks would usually trade above 2 or 3 in a healthy market, there is definitely significant potential for upside,” Roeslani stated during a press conference at the IDX building in Jakarta on Tuesday (May 19).
While acknowledging the inherent volatility of the stock market, Roeslani emphasized that the fundamental health of companies listed on the IDX remains solid, offering attractive potential returns for long-term investors. He noted that the current market correction is a normal phase, and the high yields and favorable pricing present a compelling case for investors.
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This outlook is further supported by the substantial growth in the number of retail investors in Indonesia. The count has reached 26 to 27 million, marking a significant increase from approximately 20 million the previous year. According to Roeslani, this surge in participation is a testament to growing investor confidence in the future of the Indonesian capital market.
“Logically, this growth occurs because our investors believe the exchange is becoming better and more promising. If the market lacked prospects, we would see a decline in investor numbers rather than a rise,” he explained.
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Roeslani attributed this upward trend to consistent educational initiatives led by the IDX and the Financial Services Authority (OJK). These efforts, which specifically target domestic and younger investors, are crucial for fostering a better understanding of the stock market as a medium-to-long-term instrument. He stressed that investing in the capital market serves as a vehicle for generating good returns while contributing to broader economic development.
Despite this optimistic long-term view, the market faced pressure during the first session of trading on Tuesday (May 19). The Jakarta Composite Index (IHSG) closed 202.97 points lower, or 3.08 percent, at 6,396.27. Similarly, the LQ45 index, which tracks the 45 most liquid stocks, fell by 13.67 points, or 2.10 percent, to settle at 637.42. Total trading volume reached 27.96 billion shares with a transaction value of Rp15.13 trillion across 1.73 million trades, resulting in 96 advancing stocks and 611 declining ones.
The press conference followed a working visit to the IDX by the Deputy Speaker of the Indonesian House of Representatives, Sufmi Dasco Ahmad, alongside the leadership of Danantara Indonesia. During the visit, CEO Rosan Roeslani and COO Dony Oskaria were welcomed by OJK Board of Commissioners Chair Friderica Widyasari Dewi and IDX Director of Company Valuation I Gede Nyoman Yetna.
Summary
Danantara Indonesia CEO Rosan Roeslani identifies a significant investment opportunity in the Indonesian stock market, noting that banking sector shares are currently undervalued. With many stocks trading at a Price to Book Value ratio below 1, compared to the typical 2 to 3, he highlights substantial upside potential for long-term investors. Roeslani maintains that the market’s fundamental health remains solid despite recent price corrections.
This optimistic outlook is supported by a robust increase in domestic retail investors, which has grown to 27 million participants. Roeslani attributes this surge to successful educational initiatives by the IDX and OJK, which have fostered greater public confidence in the capital market’s long-term prospects. While the market experienced a decline in the most recent trading session, officials remain focused on the potential for sustainable economic growth and attractive investment returns.