Trump Beats Trade War Drums, IHSG Falls

JAKARTA, KOMPAS - The Composite Stock Price Index experienced a correction on the first trading day in February 2025. Investors are anticipating economic uncertainty following the United States, under the leadership of President Donald Trump, beating the drums of a trade war against neighboring countries and China.

The Composite Stock Price Index (IHSG) closed down 1.11 percent to the level of 7,030 from the opening position at 7,109 in trading on Monday (3/2/2025). During the trading session, the IHSG even weakened by up to 2 percent to the level of 6,933.

Quoting the Ajaib stock trading application, the stock price index per sector that experienced the deepest correction by the end of trading was the health and basic materials sectors. Meanwhile, the best-performing stock sector was technology, followed by the financial sector.

The analysis team of Pilarmas Investindo Sekuritas stated that the weakening also occurring in the regional Asian stock markets is in line with the policy of United States (US) President Donald Trump regarding the imposition of import tariffs.

Last weekend, the US announced the imposition of massive import tariffs on its trading partners. The US imposed a 25 percent tariff on goods from Mexico and Canada and a 10 percent levy on imports from China.

In response to the policy, China announced plans to launch other countermeasures. Mexican President Claudia Sheinbaum also ordered the implementation of retaliatory tariffs ranging from 5 percent to 20 percent on US products entering their country.

Meanwhile, Canadian Prime Minister Justin Trudeau announced a retaliatory tariff of 25 percent. This will be applied broadly and will include everyday items.

"This condition makes the market anxious and raises concerns about potential disruptions to global trade," said the Pilarmas Investindo Sekuritas report.

Capital Market Observer & WH-Project Founder, William Hartanto, also told Kompas that Trump's trade war policy as previously implemented during his administration, will change the direction of the market quickly. The policy will also increase the volatility of stock prices on the stock exchange.

He predicted that the weakening of the JCI would continue and cause price declines in many stock sectors, including finance which has good fundamentals.

"I think the JCI has the opportunity to fall to 7,000 again. The factors are varied, it could be because the market is worried about Trump's tariff policy, or it could be because of the weakening of the rupiah," he said.

Negative sentiment is also considered to have come from within the country after the Central Statistics Agency (BPS) announced that the Consumer Price Index (CPI) has experienced deflation again since September 2024 by 0.76 percent on a monthly basis. On an annual basis, the CPI experienced inflation of 0.76 percent, the lowest in the last 25 years.

Equity Analyst Indo Premier Sekuritas (IPOT), Imam Gunadi, in his release revealed that the annual inflation data in January 2025 was far from the consensus prediction at 1.88 percent, higher than December 2024 at 1.57 percent. Bank Indonesia (BI) also set an inflation target in 2025 in the range of 2.5 percent plus minus 1 percent.

"In fact, with the current annual inflation data approaching the lower limit of 1.5 percent, the market is more expecting inflation to be in line with expectations or higher, which reflects the rise in purchasing power," he said.

Amid the weakening of the IHSG, investors can take the opportunity to invest in the financial sector which still has positive financial performance projections in 2025.

Infovesta Investment Analyst, Ekky Topan, said that since October 2024, many banking stock prices have fallen. This trend is especially true for large-cap stocks. For example, shares of PT Bank Rakyat Indonesia Persero Tbk (BBRI), PT Bank Mandiri Persero Tbk (BMRI), PT Bank Negara Indonesia Persero Tbk (BBNI), and PT Bank Central Asia Tbk (BBCA).

"The cause is foreign selling due to various sentiments that occurred in the market, in October starting with the issue of Chinese stimulus, then in November concerns over the trade war after Trump was elected. Then, in December 2024, it was worsened by the attitude of the US Central Bank, the Fed, which made the market project higher US interest rates for a long time," he said.

However, since January, Ekky continued, the bearish trend or decline in banking stock prices has begun to appear to be sloping. This trend is supported by positive sentiment, such as interest rate cuts by BI and also the potential for increased liquidity due to the 100 percent withholding of Export Proceeds (DHE) policy.

"After a significant decline since October, banking valuations such as BBNI, BBRI, and BMRI are also considered quite cheap, especially when combined with the potential for dividend distribution in the second quarter of 2025," he said.

With the bright spot of the reversal of the price trend for the banking sector, this momentum is good for investors to accumulate bank stocks. "This is considering the valuation that is already cheap and the actual performance is still growing," he concluded.

Issuers such as BBRI have also recently announced a plan to buy back shares or buyback which the market has read as aiming to increase share prices. In the past year, BBRI shares have fallen 26.61 percent from a price of around Rp 5,800. Currently, the shares have started to strengthen slightly at the beginning of this year to a price of Rp 4,200 per share.

BBRI Corporate Secretary, Agustya Hendy Bernadi, in the disclosure of information from the Indonesia Stock Exchange, Friday (31/1/) said that the company has prepared funds for a share buyback of IDR 3 trillion. Plan. This will be decided at the General Meeting of Shareholders (GMS) on March 11, 2025.

"The 2025 buyback will be carried out through PT BEI or outside the stock exchange, either in stages or at once and will be completed 12 months after the GMS that approved the 2025 buyback," said Agustya.