The demonstration against the omnibus law can put pressure on the stock market in the short term

ILLUSTRATION. The cancellation of the Omnibus Law is expected to reduce investor confidence.

Reporter: The first is blessed | Editor: Wahyu T. Rahmawati

KONTAN.CO.ID – JAKARTA. After the DPR knocked on the hammer for the ratification of the Omnibus Law on Cipta Kerja, the community responded with labor demonstrations in several areas. Omnibus Law is predicted to provide positive sentiment towards the stock market.

However, this rejection is predicted to put pressure on the Composite Stock Price Index (IHSG) in the short term after having managed to continue to strengthen since Monday (5/10). “Demonstrations from the public can certainly put pressure on the JCI tomorrow,” said Okie Ardiastama, an analyst at Pilarmas Investindo Sekuritas, Thursday (8/10).

Thus, a more calming action from the government is certainly expected to reduce the current heat in the field. Although on the other hand, West Java Governor Ridwan Kamil also voiced the withdrawal of the Omnibus Law, which at the same time indicated that the government had broken out votes.

The cancellation of the Omnibus Law is expected to reduce investor confidence. “For the omnibus law canceling the possibility of canceling it is small,” added Okie.

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Thus, the negative sentiment due to this demo is only short term. Unless indeed the Omnibus Law cancellation is realized, which causes foreign investors to also have the potential to sell, aka net sell.

Meanwhile, Okie predicts the JCI at the end of 2020 can touch 5,350. This is influenced by the strong sentiment that the absorption of the national economic recovery fund (PEN) is considered to be maximized in the fourth quarter of 2020, so that it can increase people’s purchasing power.

Philip Sekuritas analyst Anugerah Zamzami Nasr explained that the refusal from workers and the local government could give negative sentiments if it was prolonged, especially if it came to a strike. “Likewise, the Covid-19 case, which continues to rise, does not decline, is also negative for the economy,” he said.

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In the midst of this sentiment, Zamzami estimates that until the end of the year the JCI movement will be influenced by sentiment on the development of the Covid-19 vaccine and improved macroeconomic data that can illustrate gradual economic recovery. From abroad, uncertainty is still looming especially regarding the United States (US) election, UK and European Union trade agreements, and the risk of the second wave or the unfinished first wave.

Zamzami predicts that the JCI closing at the end of 2020 will be in range resistance first 5,031, resistance both 5,125 and resistance third 5,235. While support are at the level of 4,920 and 4,815.

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