IHSG Plummets for Two Consecutive Days after Trump Wins US Presidential Election

Donald Trump’s Re-Election: A Surprise Victory Impacting Indonesian Markets

In a shocking turn of events, Donald Trump has been re-elected as the President of the United States, shaking the financial landscape far beyond American borders. Trump’s victory in key swing states, including Georgia, North Carolina, Pennsylvania, and Wisconsin, has sent ripples through the Indonesian stock market, reflected in a significant decline of the Indonesia Composite Stock Price Index (IHSG). As markets react to this unexpected outcome, local experts express growing concern over potential capital outflows and fluctuating dollar values.

Market Response to Trump’s Triumph

On November 6, 2024, the IHSG fell by 1.44 percent or 108.06 points to close at 7,383.87. The market sentiment continued to plummet with a subsequent trading session on November 7, where the index further decreased by 0.90 percent, closing at 7,243.85. Notably, foreign investors reported a net sell of Rp1.09 trillion during the initial trading day following the election results.

Despite a bullish trend in many Asian markets fueled by China’s impressive trade surplus of $95.27 billion for October 2024, the IHSG’s decline starkly contrasts with regional performance. Rully Arya Wisnubroto, a senior economist at Mirae Asset Sekuritas, observed that the local financial market’s adverse reaction illustrates a “risk-off” sentiment gripping global investors. “IHSG significantly weakened by 1.4 percent to 7,383.9, the first time below 7,400 since mid-August,” he commented in a recent statement.

Implications of Trump’s Re-Election on Global Trade

The ramifications of Trump’s re-election extend beyond Indonesia, causing anxiety within the international finance community. Concerns are mounting regarding the potential for renewed protective policies under Trump, which could adversely affect global trade dynamics and economic stability. According to Bank Indonesia (BI), the US dollar is anticipated to strengthen as a result of tighter monetary policies that the US Central Bank may adopt, further complicating Indonesia’s economic landscape.

Capital market observer William Hartanto expressed his concerns: “There’s a panic in the market that has caused a significant response to Trump’s victory. IHSG collapsed as investors weighed in on the potential consequences of his administration’s policies.” Hartanto further suggested that the initial market response might stem from historical fears associated with Trump’s previous presidency.

Experts Urge Caution and Reflection

Reacting to the day-after market turmoil, Iman Rachman, Director of the Indonesia Stock Exchange, emphasized the need for patience before drawing definitive conclusions about the election’s impact on IHSG. “This is only a day after the end of the biggest political event in the US. Let’s wait and see,” he remarked at the Capital Market Summit Expo 2024.

Analysts underscore the necessity of continuous monitoring and evaluation as the effects of Trump’s policies unfold. The financial community remains cautiously optimistic, hoping that immediate reactions do not dictate long-term investment strategies.

Conclusion: What Lies Ahead for Indonesia?

As the situation evolves, both local and international investors are keenly monitoring the developments in US policies and their potential impacts. The Indonesian stock market remains in a state of flux, as it grapples with external pressures while trying to maintain stability.

The coming weeks may determine whether this initial response is merely a fleeting reflection of investor sentiment or heralds deeper, more persistent economic challenges. With the world watching, the Indonesian market’s trajectory following Trump’s re-election could play a crucial role in shaping the region’s economic landscape.

Readers are encouraged to share their thoughts on how they view Trump’s re-election and its implications for global markets. What strategies should investors adopt in light of recent developments? Join the conversation, and let us know your insights.