Jakarta, CNBC Indonesia – The Indonesian stock market in yesterday’s trading was in the red zone. The Composite Stock Price Index (IHSG) closed more than 2% down in trading on Thursday (5/1/2023), although stocks in Asia-Pacific and the United States (US) tended to be green.
JCI closed down 2.34% at 6,653.84. JCI also left the psychological zone of 6,800 and 6,700 in a single day.
Yesterday’s index transaction value reached IDR 14.16 trillion, with the volume of traded transactions reaching 23.14 billion shares, which changed hands 1.3 million times.
But strangely, the collapse of the JCI occurred when stocks in Asia-Pacific were observed to be very excited, where it was observed that the stock market of Indonesia’s neighbors, namely Singapore, had soared by more than ‘1%.
Analysts revealed that there were several factors that caused the Indonesian stock market to crash.
The Fed’s interest rate hike
Hans Kwee, director of Equator Swarna Capital, said the decline in the Indonesian stock market was caused by global factors. The Fed, which will continue to raise interest rates in the United States (US), is still the main factor that caused the Indonesian stock market to crash.
“Even Fed official Minneapolis Fed Chairman Neel Kashkari expects 5.4% or 100 basis points again. Fed will not lower interest rates in 2023 after raising 50-100 basis points,” he told CNBC Indonesia on Friday (6/1).
Apart from that, another factor comes from China, which is currently facing a wave of Covid-19 and has the potential to reach its peak during the Lunar New Year celebrations on January 19, 2023. “The potential to disrupt the economy China due to the spread of the Covid-19 virus,” he added.
Additionally, there is pressure on commodity prices due to the Fed’s interest rate hike. This has the potential to push the economy into a recession.
Global economic slowdown
Lukman Leong, Senior Financial Market Analyst at DCFX, said the factor causing the JCI to plunge in yesterday’s trading was due to investor concerns about the slowdown in the global economy which would suppress the value of commodity exports.
“In addition, China’s plan to lift the ban on coal imports from Australia is feared to reduce the record trade surplus that has been greatly aided by high-priced coal exports,” he said when contacted by CNBC Indonesia.
Weakening of commodity prices
MNC analyst Sekuritas Herditya Wicaksana believes the JCI which plunged more than 2% in yesterday’s trading was caused by several negative sentiments. Among them, the weakening of global oil commodity prices. The reason is that some time ago coal was also corrected.
“This is due to China’s plan to reopen coal imports from Australia,” Indonesia told CNBC.
Also, another factor comes from the Fed’s hawkish signal in its monetary policy for some time to come by reducing the inflation rate to 2% on target. Additionally, there is potential for a recession and slowdown in the global economy where the IMF’s projection this year is only 2.7% compared to 2022 which is 3.2%.
“With this (Fed) signal, there appears to be a shift of assets from the equity market to the bond market. This is indicated by the outflow into the market of IDR 877 billion in previous trading,” he said.
The same thing was also said by Senior Investment Information Mirae Asset Sekuritas Indonesia Nafan Aji Gusta Utama who said that the collapse of JCI was due to the weakening of the prices of large market capitalization stocks.
Meanwhile, the weakening of large-cap stock prices was influenced by external factors, in particular the Fed’s aggressive sentiment in the results of the FOMC meeting minutes for December 2022.
“Regarding a strong commitment to lower the US inflation rate (US CPI) by maintaining aggressive monetary tightening throughout the year,” Nafan said when contacted by CNBC Indonesia.
On the other hand, the negative sentiment has also been reinforced by factors such as the slowdown in global economic growth and the increased likelihood of a global recession later this year.
RI Stock Market Coloring Campaign Season
PT Reswara investment chief Gian Investa Kiswoyo Adi Joe said yesterday’s weakening of the JCI was influenced by the campaign season factor causing large amounts of local funds to exit. This is because foreign net sales are not as large as local funds. However, there will come a point where foreigners will return to buying blue-chip stocks in large numbers.
“Because campaign season is about to kick off. So there’s local money coming out of IDX,” she said in a short message.
According to him, the Indonesian economy is buoyed by strong domestic consumption, thereby attracting foreign attention for buying back blue-chip stocks on the Indonesian stock exchange.
Even so, the release of funds from the capital market for election spending can move the wheels of the national economy. Because the funds are used for shopping. “So the economy is definitely spinning. With that extra money. Because Indonesia’s economy is underpinned by strong domestic consumption,” she said.
Transition to bonds
Meanwhile, Binaartha Sekuritas analyst Ivan Rosanova said, “Technically, the JCI closing below MA20 yesterday was an early indication of a potential correction and a reason to sell.
“The ability to switch from risky instruments such as stocks to other instruments, namely bonds,” he concluded.
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