CAPITAL MARKET

Indonesia had experienced economic devastation that had been built through the joints of the new order policy began crawling back construct the foundation of the economy. International Financial Corporation (IFC) classification of stocks linked to the classification of the state. If the country is still classified as a developing country, the market in the country is also in a developing stage, although market shares are fully functional and well organized.

Consequences of growing capital market is a small market capitalization value. A measure of market capitalization ratio is usually seen from the comparison with the value of a country’s gross domestic product. In addition to the other consequences is the presence of thin trading volume (thin trading) caused by trade (non – syncronous trading) on the market. Synchronous trading is not caused by the number of securities traded not entirely, meaning that there is some specific time in which a securities transaction does not occur (Hartono, 2003). Indonesia which is still listed on the IFC is still a developing country with the worst investment climate in the East Asian region. Even with a record like that, in fact we are still considered by foreign investors. The fact that there are national companies with actually being in the strategic sectors of the country, offered by some foreign institutions through the acquisition of shares. The presence of capital inflows as investments in general is foreign investment should be a booster of the macro economy. The main reason for foreign investors to move their funds to developing countries is that developing countries have the potential untapped business entirely, as in the classic motifs of investment to other countries. Michael Fairbanks and Stace Lindsay senior consultant at Monitor Company express purpose of foreign investors coming to the poorer countries is usually only see an opportunity to attract natural resources, cheap labor and wages as the target product or service that is not good quality.

But there are other reasons that accompany such motives, the striking differences with developed countries. If we use a life cycle approach to the business of developing countries into the category growth (growth) than developed countries that fall into the category of ripe (mature). It means that there is the attraction of high economic growth which of course is accompanied by a high return anyway, because economic growth is an aggregate indicator of industry in a country. For example, the mobile telecommunications business in Indonesia, which explored the new solid in Java alone, while outside it still has high potential to serve new markets.

in my opinion Developed capital markets can be identified through a country, whether the country is a developed country or a developing country classified. Indicator is the per capita income of a country, which is usually included in the low to middle- income countries. But the most striking characteristic is seen the value of the market capitalization of companies listed, the cumulative trading volume, the tightness of capital markets regulation, sophistication and culture to domestic investors.  it is true that the stock market is one of the solutions to the economy of Indonesia. because with the capital market, Indonesia can compete with other countries in the ASEAN Economic Community.