Capital market investments and instruments therein

Capital market investments are lucrative investments today. Transactions on the Indonesian capital market have now also been made easier. You can take advantage of this great opportunity to get the profit you want.

So what exactly is the capital market? What investment instruments are there on the capital market? You can find the answer here along with other things related to it.

What is the capital market?

A capital market is a place where companies, governments, and local authorities meet with the aim of raising fresh funds in a short period of time and profiting from growing funds.

In Indonesia, only 1 available capital market is based in Jakarta, namely the Indonesia Stock Exchange. Here you can choose any instrument you want to invest in. Anyone can participate, including students who want to learn about investing.

What is a capital market investment?

Capital market investment is an investment activity in securities available on the capital market with the aim of achieving short or long-term profits.

3 types of self-regulatory organizations

All activities on the capital market do not just happen. There are 3 institutions that participate in overseeing and setting absolute rules for activities in the capital market so that their implementation is safe. This is the organization that represents the center of Indonesia’s capital market.

  • IDX or Indonesian Stock Exchange
  • KSEI or Indonesian Central Securities Depository
  • KPEI or Indonesian Clearing and Guarantee Corporation

1. IDX or Indonesian Stock Exchange

IDX can be called the main implementer of all activities that exist on the capital market. The IDX also selects which companies are eligible to offer shares on the capital market.

2. KSEI or Indonesian Central Securities Depositary

It is a place where the custodian is located to store capital and income from investors’ investments in the capital market. Custodian banks are commissioned with the administration of various investments that are present on the capital market.

3. KPEI or Indonesian Clearing and Guarantee Corporation

The clearing is also needed in transactions that take place on the capital market, so its activities are also carried out by a special organization called KPEI.

KPEI guarantees a smooth flow of clearing services performed on the capital market according to the needs of investors.

capital market participants

In a market, there are usually buyers and sellers who exchange transactions. There are also parties doing business in the capital market, but the conditions are different. These are the actors of capital market transactions.

  • investors
  • Exhibitor

1. Investors

Buyers in the capital market are referred to as investors. Those looking for stocks and other securities to buy. Before making a purchase, the investor will of course first carry out an analysis in order to select the right securities in terms of quality and capital.

2. Issuer

The seller on the capital market is referred to as the issuer. The issuer’s goal is to seek fresh funds from investors. The receipt of these funds is eagerly awaited as they will be used to develop the business.

However, in order to enter the capital market, a company wishing to become an issuer must meet certain conditions and procedures set by the Indonesian Stock Exchange.

Functions of investment firms

In order to be able to enter the capital market, investors cannot simply enter. You must first go through an investment firm whose operations have received approval from the OJK and other authorized institutions. Here are the different functions of investment firms according to their role.

  • Investment Manager
  • nsurer
  • ecurities broker

1. Investment Manager

Is a company that manages the capital paid up by investors. The Investment Manager is responsible for providing regular reports to investors. His job is only to manage securities, not to sell them.

2. Underwriters of securities

The party that drafts the contract for a company that is currently listed on the stock exchange at the time of its public offering. There is no additional obligation to purchase the remaining or unsold securities after the public offering period.

3. Brokerage of securities

Also called broker. Its task is to support investors in buying or selling securities available on the capital market. Brokers can also conduct transactions based on their own interests.

Investors wishing to enter the capital market must first register through a broker, not through any entity other than a broker. It is mandatory to register with a broker that has received the approval of IDX and OJK.

Various capital market investment instruments

Capital market investments can be made using various instruments. Here is the list of instruments.

  • debt or bonds
  • Investment funds
  • ETF
  • Split

1. Debt or Bonds

The first instrument you can choose bonds. With cheap bonds and corporate bonds, the state can offer bonds on the capital market.

The benefit of borrowing is that you get a principal loan plus a coupon or interest. The bond coupon is quite tempting at at least 4%. However, bonds must have a special offer period and are not always tradable.

2. Mutual Funds

A no less profitable instrument on the capital market are mutual funds. Securities available on the capital market or on other markets can be traded in this instrument.

The benefits correspond to the nature of the effect itself. For example, in mutual funds, the most profitable securities are stocks because they are the highest-risk stocks.

3. ETFs

It is a unique investment vehicle in the capital market because capital management is like mutual funds, but transactions are carried out like stocks. Investors can make direct ETF trades as they wish.

4. Stock

It is the most popular instrument and has many transactions in the capital market. You buy a stock at a low price and then sell it at a rising price for a profit.

Profits can also be made by issuers that pay dividends. However, this only happens when the company makes a profit.

 

Capital market supporting institutions

There are 4 institutions in the capital market that help make the transaction process smoother and safer. These are the 4 institutions.

  • custodian
  • trustee
  • securities management office
  • Security Valuation

1. Custodian

Is a bank that is a temporary repository of capital and investment income of investors in the capital market.

2. Trustee

The trustee has the same function as a custodian, however, the trustee’s focus is usually only on debt management.

3. Securities Administration Office

As the name suggests, this bureau performs securities administration functions, including recording securities and distributing securities proceeds to investors.

4. Security Rating

On the capital market, issuers are rated according to their debt risk. In this way, investors know the risks of the issuer and their impact.

What are the advantages of investing in the capital market for investors?

The capital market is here to offer investors a variety of benefits. You must know these advantages.

  • bring real benefit
  • Ensure secure transactions
  • Offer equal investment opportunities

1. Offer real benefits

Investing in the capital market allows investors to get the profits they want. You can also start with small capital.

2. Offer secure transactions

Capital market transactions are strictly regulated by law. Not everyone can enter. If there is a scam, it will be caught immediately.

3. Offer equal investment opportunities

Not only those with money who can invest but also investors with minimal capital are given an equal chance to make profits.
Conclusion

That is the explanation for the profitable capital market investment. Before entering it, you must first familiarize yourself with the intricacies so that you do not make a wrong decision.