Yanuar Dananjaya

STOCK B.Sc., MM
UPH - Surabaya
Campus

Common Stock: Represent ownership of a company

 Based on percentage of ownership

 Right to vote in annual meeting => mainly to choose Directors (Komisaris) to represent

stock owner
 Right to company profit

Preferred stock
 In between stock and bond

 Dividend is ‘promised’ but will not be paid if company has no money

 No control on company
 Yanuar Dananjaya

STOCK B.Sc., MM
UPH - Surabaya
Campus

Stock as Instrument to distribute profit to stock holders

 Cash Dividend => provide cash per share of stock. The most

common
 Stock Dividend => provide certain number of shares per

share of stocks
 Stock Repurchase => use profit to purchase stocks in the

market, becomes treasury stock

 Yanuar Dananjaya

STOCK B.Sc., MM
UPH - Surabaya
Campus
Initial Public Offering: first time stock sold to public
• Use the help of investment bank or security company
• For legal requirement
• For valuation and pricing  affect stock price
• For advice on IPO timing
• For marketing  full commitment / best effort
• Usually IPO price is set low  buyer of IPO almost always profit 
marketing strategy
• Usually offered to big customers of investment bank/security
company
• Create primary and secondary market
 Yanuar Dananjaya

STOCK B.Sc., MM
UPH - Surabaya
Campus
Stock Trading
• Stocks are traded through Bursa Efek Indonesia
• Only registered brokerage company can trade in BEI
• Investors trade through broker by paying commission
• Investors open account with broker, money held in custodian
bank
• Can use margin  borrow money from broker to buy more
stock  higher profit, but also higher lost
• Outside Indonesia can short the stock  profit if price go down
• Stocks are traded in lot of 100 shares
• Unlike forex and commodity trading, no spread
 Yanuar Dananjaya

STOCK B.Sc., MM
UPH - Surabaya
Campus
 Stock Trading (cont)
• IHSG: Indeks Harga Saham Gabungan  to monitor average
increase/decrease of all stocks price in Indonesia
• Initially IHSG = 100
• Change in IHSG is in proportion of stock market capitalization
(number of shares X price)  big company has more effect to
IHSG compared to small company
• Other index: LQ45, Kompas100, Jakarta Islamic Index
 Yanuar Dananjaya

STOCK B.Sc., MM
UPH - Surabaya
Campus
 Stock Trading (cont)
• IHSG: Indeks Harga Saham Gabungan  to monitor average
increase/decrease of all stocks price in Indonesia
• Initially IHSG = 100
• Change in IHSG is in proportion of stock market capitalization
(number of shares X price)  big company has more effect to
IHSG compared to small company
• Other index: LQ45, Kompas100, Jakarta Islamic Index

• Download: RTI Business