JAKARTA -- The Indonesia Stock Exchange has launched a new industrial classification for over 700 companies listed on the bourse, seeking to attract more investment in technology and health care stocks as it looks to encourage trading amid the COVID-19 pandemic.
The new IDX Industrial Classification consists of 12 sectors, 35 subsectors, 69 industries and 130 subindustries. It took effect on Monday, replacing the 25-year-old Jakarta Stock Industrial Classification, or Jasica, which comprises just nine sectors and 56 subsectors.
IDX executives said Jasica no longer fits the needs of the bourse, which has 724 listed companies, roughly three times the number it had when the old classification was introduced in 1996.
"Jasica doesn't have specific categories for new kinds of companies that we had never thought of before. [And] the categories are too wide at Jasica, so it fails to group companies homogeneously," said Laksono Widodo, IDX director for trading and membership. "There are now many more listed companies coming from a wider variety of types and industries," he added.
One of the new sectors in the IDX-IC is technology, which groups companies that use digital platforms as part of their core operations. The technology sector is set up to accommodate a growing number of tech startups that are expected to list this year. Some of the startups had a successful 2020, buoyed by the coronavirus pandemic, and are seeking IPO funds to finance their growth.
The IDX-IC also includes the health care sector, which has grown in importance against the backdrop of the pandemic. Health care companies were previously grouped under "trade, services and investment," which encompassed everything from a movie production house to a soccer club.
Since 2018, Indonesia has been Southeast Asia's most active IPO market by number of new listings, a result of the government and the IDX's strategy of inviting more small and medium-size enterprises to join the bourse. In 2019, the IDX launched an acceleration board to cater to such businesses and to harness the tech startup boom of the past several years. It reported 51 new listings in 2020, slightly fewer than the 55 that listed in 2019.
Ignatius Denny Wicaksono, IDX head of product development, said he hopes the more homogeneous groupings will help investors reach more accurate valuations of a companies by easily comparing them with their peers.
Widodo also added that the IDX IC will be especially helpful to institutional investors, including asset managers and pension funds. "We hope that this sharper and more measurable classification will make it easier for stakeholders to develop their investments better."
The benchmark Jakarta Composite Index has been recovering from the seven-year lows it plumbed in March last year. It ended 2020 near its pre-pandemic level, having lost 4.8% for the year. Despite the decline, it outperformed the benchmark indexes in Singapore, Thailand and the Philippines.