IHSG Drops to 6,300, BEI Boss: We Are Not Silent

JAKARTA, KOMPAS - President Director of the Indonesia Stock Exchange Iman Rachman stated that the exchange is not silent about the phenomenon of a deep decline in the composite stock price index. The exchange will soon discuss with market players to create policies that increase investor confidence.

The Composite Stock Price Index (IHSG) at the end of February 2025 fell to touch the level of 6,300, the lowest since September 2021. IHSG has fallen almost 5 percent compared to the end of trading last week which was still in the range of 6,800.

Iman, to reporters at the Indonesia Stock Exchange (IDX) Office, Jakarta, Friday (28/2/2025), said that since the beginning of 2025, foreigners have made net sales of up to IDR 19 trillion so that the JCI has fallen by around 12 percent.

"IHSG is not us talking about why this is. However, there are many causes of changes in the index, and it is not just one party. Frankly, it is not easy. Always if the index has three impacts, how global, how domestic, and how the corporation itself," said Iman.

He said, global is still the main factor influencing foreign investors to leave the domestic market. One of them comes from the uncertainty caused by the policies of the President of the United States (US) Donald Trump's second term known as Trump 2.0. His policies were issued in the form of a tariff war between the US and its trading partners.

The US factor with the policy of the US Central Bank The Federal Reserve (The Fed) in lowering the benchmark interest rate is also a consideration for foreigners to enter the US stock market. The Fed is expected to only lower interest rates once this year.

Iman also assessed that there are domestic factors that are considered by foreign investors. These factors include the assessment of the global market index institution Morgan Stanley Capital International (MSCI) on the domestic market which also has a big influence on foreign investor confidence.

In its latest report at the end of February, Indonesia's stock ranking in the MSCI index changed from equal-weight (EW) to underweight (UW). Starting in March, MSCI will change the weight of Indonesian stocks from 2.2 percent to 1.5 percent.

The assessment is associated with weakening economic growth prospects, including declining profitability of the cyclical sector. In fact, Iman said, annual profits of financial sector issuers below the consensus target are also in the spotlight of investors.

"We must be aware that currently 40 percent (of the asset composition in the capital market) is from foreigners. Then, almost 40 percent of the total investment belongs to retail. Previously, it was the other way around, where 70 percent were domestic and retail. If the IHSG fell, everything was immediately swept up by domestic investors," said Iman.

For that reason, Iman assessed, domestic market players must play a role in maintaining investor confidence in the capital market. "We will not remain silent with the decline (of the IHSG)," he said.

So far, the JCI still has the potential to continue weakening. Phintraco Sekuritas analyzed, Friday (28/2), the JCI formed a new midpoint in 2025. Selling pressure is still aggressive in today's first trading session, especially issuers in the banking sector.

"Technically, the stock price movement is still in line with the target of further weakening to the 6,100 area," said the Phintraco Sekuritas analyst team in its review.

Director of Development of the Indonesia Stock Exchange (IDX) Jeffrey Hendrik, on the same occasion, added that with the current market conditions they will hold meetings with market players, including securities, asset managers, and listed companies.

They also held a similar meeting when the JCI weakened at the beginning of the Covid-19 pandemic in 2020. Some of the things that will be discussed include market players' responses to unusual events in the stock market and the continuation of derivative products that have the potential to be negative for investors.

For example, during the Covid-19 pandemic, the IDX decided to ban trading in short selling products. The short selling and intraday short selling products were previously planned to be traded this year starting in March or April 2025. The continuation of the product, Jeffrey said, depends on the results of discussions with market players.

In the future, BEI will also routinely conduct socialization to several countries to provide information related to the market in Indonesia. This is expected to maintain relations and trust with foreign investors.

"We from the stock exchange are certainly very open to providing support to our current market so that market confidence can increase," he said.