TOKYO -- Japan Securities Finance, a provider of capital for margin trades, has acquired a 10% interest in a group arm of the Indonesia Stock Exchange as it seeks to generate business beyond the lethargic Japanese market.
JSF has invested 55 billion rupiah ($3.76 million) in Pendanaan Efek Indonesia, a securities-financing company 90%-owned by the group anchored by the Indonesia Stock Exchange. An agreement on the transaction was reached with Indonesia's Financial Services Authority.
The deal marks the first overseas investment for JSF, Japan's sole institutional lender of money and shares to brokerages, which in turn provide them to margin traders. It is also the first foreign capital injection into the Indonesia Stock Exchange group.
The two sides will form an advisory committee to exchange personnel and share know-how in stock and bond transactions. JSF will also help develop lending and other services yet to take root in Indonesia.
As President Joko Widodo's government seeks to strengthen Indonesia's financial sector, the middle class is increasingly taking to stock and bond trading. Indonesia is now home to more than 3 million securities accounts, up from 360,000 in 2014.
But only about 670 companies were publicly traded there in 2019, less than 20% of the tally in Japan. Just 155 stocks were accepted for margin trades as of June, or 4% of Japan's figure. The partnership with JSF aims to boost Indonesian efforts to bring a broader range of individuals into the market.
The Indonesian stock market has growth potential, considering its population, and will serve as a springboard for JSF's international expansion, a senior executive said. The Japanese company also has memorandums of understanding for information exchange with financial authorities of South Korea, Taiwan and Thailand, and plans to strengthen these relationships.