Citigroup has gone live this week on the Indonesia stock exchange with a seat that will allow it to offer its clients direct access to the Indonesian market. FinanceAsia spoke with Citi's regional equities head Adrian Faure about the new seat and the banks further expansion plans in the Asean region.
Why have you decided to take this seat and why has it taken you a year or so to get it?
Indonesia is a priority market for Citi in Asia and we are seeing increased flows from our global investors into the country. The IDX membership completes the range of our markets product platform for our clients and gives us the ability to offer them better access to the Indonesia stockmarket through underwriting and equity brokerage activities.
We already have a strong research team in Indonesia and this seat is a natural extension so that we can provide market leading research along with sales and trading services to our clients.
It has taken us a year or so as we had to wait for a seat to become available and then the necessary approval and regulatory process have to be completed with testing before you can go live. We are delighted to be live and have already completed several transactions for our global and local clients. The timing is also excellent as we are in Indonesia today for our fourth annual Indonesia Investor Conference which again has drawn huge interest from the global investor base with more than 80 institutional investors in town this week for the event.
What staffing plans do you have for this business in Indonesia? And is this part of a wider build up in the Asean region.
We also announced this week the appointment of Hasan Ukim as head of equities sales. Hasan joined in January as head of dealing and was promoted to his current role. He was previously with J.P. Morgan Indonesia. We have also hired Santy Tandiana as an equity salesperson. She was previously with Bank of America Merrill Lynch Indonesia.
We also intend to hire two other professionals to cover sales trading and dealing. We have been hiring aggressively on the research side too in anticipation of its seat approval and recently appointed Alex Wreksoremboko as head of research for Indonesia who joined from Bank of America Merrill Lynch, where he was the top ranked analyst in the market.
The new equities operation has 15 staff across sales, distribution, research and support functions with plans to increase headcount by a third by the end of the year.
Establishing this seat in Indonesia is a natural extension of our footprint and underlines our focus on building out further in the Asean markets. We also are close to finalising a seat in Malaysia on Bursa Malaysia. We continue to invest in our Asia Pacific equities franchise to help our regional and global clients who are increasingly looking to invest in Asian equities given the region's growth prospects.
What services do you already offer clients in Indonesia?
Citi's Markets business in Indonesia has a comprehensive range of product presence across sales and trading in FX, fixed income and credit, with a strong sales and research presence which has been expanding since beginning of the year ahead of the seat in IDX.
Our primary and flow business are drivers for our growth and the IDX seat will help us become a leading player in the secondary market and facilitate increased investment from our global clients into Indonesia.
Citi is already quite active in the Indonesia capital markets, helping the Republic of Indonesia and Indonesian corporates raise more than $3.5 billion from capital markets this year. We are also active in the primary equities market with recent issues led including Bank Danamon's $365 million rights issue and Indika Energy's $330 million IPO. This seat will allow us to match this primary strength with secondary flow strength.
What are your predictions for the Indonesia stockmarket?
Indonesia has been a key beneficiary of investors chasing for growth in Asia, with net inflow of funds at $1.1 billion year-to-date against $1.3 billion in 2009. With GDP growth expected to be at 6% for 2010 driven by strong domestic consumption, exports and investments, the Jakarta Composite Index continues to hit an all time high in the past. Alex (Wreksoremboko) expects the Jakarta index to rise to around 3,400 points by the end of the year -- a 14% gain from yesterday's (Aug 4) close.
