“The Way To Become A Stock Investor”

Stock as An Investment ChoiceStock as An Investment Choice

§ Stock is one of valuable assets which traded in capital market

§ Stock is a part of ownership or capital participation in a company or corporate

§ Shareholders have the right to attend the General Meeting of Shareholders

§ Shareholders have the chance to receive dividend

§ Stock is a liquid asset, it is easy to trade

The The BenefitsBenefitsof Investing in Stockof Investing in StockThe Benefits of Investing in Stock:

1. DividendA dividend is a portion of a company's profit paid to shareholders.

Example: PT BBB pays to its shareholders IDR 500 for every share that they have as a dividend. Marry owns 5,000 shares (50 lots) of PT BBB. So, the amount of dividend Marry will receive is IDR 2,500,000 (tax excluded).

2. Capital GainCapital gain is the profit a person will receive when he sells his share at higher price than its purchase price.

Example: When James bought the stock of PT BBB, it was only IDR 3,000 per share. Several years later, the stock reached the price of IDR 4,000 per share and hedecided to sell them. So, James received a profit of IDR1,000 for every share that he sold.

The The Risks Risks of Investing in Stockof Investing in StockThe risks of investing in stock:

1. Not Receiving Any DividendBasically, dividend is paid from the company’s profit. So, if the Company suffers a loss, there will be no dividend paid to its shareholders.

2. Capital LossCapital Loss is the reverse of Capital Gain. It is the situation when the stock is sold for a price that is lower than its original purchase price.

Example: An investor bought PT ABC Tbk’s stocks for IDR 3,000 per share and sold the stocks several months later when the stock price fell to IDR 2,500 per share. The investor suffers a Capital Loss of IDR 500 for every share that he sold.

Indonesian Indonesian Capital Market StructureCapital Market Structure

Indonesia Stock Exchange

(PT Bursa Efek Indonesia-BEI)

Indonesian Clearing and GuaranteeCorporation

(PT Kliring dan Penjaminan Efek Indonesia-KPEI)

Indonesian Central SecuritiesDepository

(PT Kustodian Sentral Efek Indonesia-KSEI)

Securities Company Supporting Institutions Supporting Entities INVESTOR

§ COMPANY

§ PUBLIC COMPANIES

§ MUTUAL FUNDS

§ Underwriter§ Brokerage

§ Investment Management

§ Share Registrar§ Custodian Bank§ Trustee§ Rating Agency§ Indonesia Bond Pricing

Agency (IBPA)§ Securities Investor

Protection Fund (SIPF)

§ Independent Public§ Accountant/Auditor§ Notary§ Appraiser§ Legal Counsel

§ Domestic§ International

How to Own A StockHow to Own A Stock

Basically, there are 3 ways to have a stock:

1. Through the Primary Market or when a Company held an Initial Public Offering (go public)

2. Through the Secondary Market or after the stock is listed and traded in the Exchange

3. Through the Mutual Funds

Ø Especially in the Secondary Market, you have to become a client in a Brokerage or Securities Firms which member in the Exchange.

Ø There are about 120 Securities Firms listed in the Indonesia Stock Exchange that can help you to invest in capital market.

Open an account in a securities firmPT ABC Sekuritas

Member of IDX

1. Submit the forms which is provided by the securities firms. The forms are sub account opening form and Rekening Dana Investor form (RDI).

2. Provide some copies of ID, such as Personal ID and Personal Tax Number (in case of needed) also the copies of front page of your personal bank account book to fill in the sub account opening form.

3. Deposit early fund to RDI account on behalf of Investor’s name. Each securities firms set certainly deposit differently (starting from Rp. 100.000,-).

4. After your account has been approved, you are ready to make a deal!!!

Investor

The First Step To Become An InvestorThe First Step To Become An Investor

Stocks Trading MechanismStocks Trading Mechanism

T+3

Exchange Member

Investor

ask/bid

Investor

ask/bid

Exchange Member

The Informations of Stock Trading in Indonesia Stock ExchangeThe Informations of Stock Trading in Indonesia Stock Exchange

þ Stocks trading applied Continuous Auction System which based on order-driven market

þ The Party allowed to deal the transaction and input the order from Investor is member of the Indonesia Stock Exchange only who also member of Clearing and Guarantee Corporation.

þ The Transaction through JATS-Next G (Jakarta Automated Trading System Next Generation)

þ The Investor do the stock transaction through the securities firm which having author as Broker Dealer Representative License.

þ The Securities Firm will charge fee for every transaction which done by the Investor.

þ The Transaction conduct in scripless which T+3 settlement.þ The Transaction conduct by remote trading system

Monday Tuesday Wednesday Thursday

Buy Payment

Wednesday Thursday Friday

Sell Receipt

Saturday Sunday

T + 3 T + 3

Monday

Schedule of Trading Schedule of Trading Schedule of Pre-Opening Trading

Monday -Friday

08.45.00 – 08.55.00 JATS Time Member of Exchange input the buy/sell orders

08.55.01 – 08.59.59 JATS Time JATS will process pre-opening settled price & transactionallocation

Days 1st Session 2nd Session

Monday - Thursday 09.00 – 12.00 JATS Time 13.30 – 15.49 JATS Time

Friday 09.00 – 11.30 JATS Time 14.00 – 15.49 JATS Time

Monday - Friday15.50.00 – 16.00.00 JATS Time Member of Exchange input the buy/sell

orders

16.00.01 – 16.04.59 JATS Time JATS will process pre closing settled price & transaction allocation

Monday –Friday

16.05 – 16.15 JATSTime

continuous auction dan timepriority

Schedule in One Day Trading

Schedule of Pre-Closing Trading

Schedule of Post Trading

The Stocks Price MovementThe Stocks Price MovementWhy the stocks price fluctuate?

The fluctuation of a stock price is determined by the supply and demand of the stock.

Higher Demand à Higher Stock Price and vice versa.

Other factors that influence the stock price:

ü Bank Interest Rate Shift

ü Inflation Rate

ü Indonesian Rupiah Exchange Value

ü The company’s Performance, such as the number of products sold, income, dividend, etc.

ü Non-Economical factors, such as the social and political situation.

A stock price can fluctuate everyday.

A stock price does not change if there is no transaction of the stock.

Stock A goes up3 poins !!

Sell.!!

Observe the Market ConditionObserve the Market Condition

Ask for information and recommendation from your Broker.A broker will inform you about the market condition and give recommendation of potential stocks to buy or sell.

Actively observe the market by yourselves through various media.Besides relying on the information given by your Broker, you can actively observe the market condition from the television, internet, daily newspapers, and radio.

There are several ways to observe stock market:

Stock Price IndicesStock Price Indices

• Stock Index indicates the trend of the market movement

• A rising index means there is a general increase of stock prices in the Exchange.

• On the contrary, falling index means there is a general decrease of stock prices in the Exchange.

• Index is an important indicator for the Capital Market participants.

Knowing The WaysKnowing The Ways, , Knowing The BenefitsKnowing The Benefits

Let’s InvestingLet’s Investing!!

For further information:Indonesia Stock Exchange

Phone (021) 5150515 Fax. (021) 5150330Email to callcenter@idx.co.id

Toll Free 0 800 100 9000 (office hours)