How Indonesia's Richest Woman Lost $3.6 Billion In Just 3 Days

Marina Budiman has lost her spot as Indonesia's richest woman after losing $3.6 billion in just three days. According to the South China Morning Post (SCMP), Ms Budiman, the co-founder and president commissioner of data centre company DCI Indonesia, was making $350 million each day, which propelled her net worth to $7.5 billion. However, three weeks later, she lost almost half of her net worth after the shares of her firm came crashing down. She wasn't the only one hit. Her fellow billionaires and co-founders, Otto Toto Sugiri and Han Arming Hanafia, also saw their combined net worth soar by over $17 billion before they plummeted. 

According to the SCMP, DCI closed on Tuesday with a market value of close to $17 billion, compared to last year's revenue of $112 million and $49 million profit. The company's stock was trading at 416 times its earnings, making it the most expensive stock among comparable firms.

However, with the crash of DCI Indonesia's shares, Ms Budiman's wealth dropped by half. This could be yet another addition to the country's infamous boom-and-bust stock price run. One of the reasons behind this is low liquidity. Many Indonesian companies have stocks that aren't frequently bought or sold. So, when a stock is thinly traded, even small orders can cause big price movements. 

DCI shares took a hit because 78% of shares are owned by only four people. Since most shares are held by a small group, only a tiny fraction is available for public trading. So, of the 2.4 billion outstanding DCI shares, just 80,400 shares changed hands by midday on Wednesday in Jakarta compared with millions at companies in Indonesia of a similar size.

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DCI's price swings "are largely a function of its tight free float. Bid-offer spreads are narrow, so any substantial positioning can move the stock significantly," said Mohit Mirpuri, a fund manager at SGMC Capital Pte in Singapore, as per the outlet. 

Notably, according to SCMP, wild price swings in stocks are a common and increasingly problematic feature of Indonesia's equity market. Dozens of firms have moved by 1,000% or more in recent years, their shares seemingly unshackled from the underlying financials. 

In DCI's case, the rapid price hike in shares was fueled by investor confidence because of the rising demand for centres. Foreign investments also played a role. For example, Oracle Corp. is in discussions with Indonesia's government to establish a cloud services centre in the country.