Bank and Conglomerate Shares Fail to Support Stock Market

JAKARTA, KOMPAS - The domestic stock market slumped throughout the first week of February 2025. Various stocks with good fundamentals such as banking to conglomerate stocks were no longer able to support the prices of other stocks after being abandoned by foreign investors. How should investors who are still holding on act?

The stock market worsened on Thursday (6/2/2025). The Jakarta Composite Index (IHSG) was corrected by 2.1 percent to 6,875 following Rp2.3 trillion of foreign investor funds withdrawing from the exchange.

On Friday (7/2), the IHSG correction continued until it broke through the support limit at 6,700. The index position was also calculated to be minus 5 percent compared to the level of 7,076 in trading on Friday (1/2) last week.

Stocknow.id Capital Market Analyst, Hendra Wardana, said that the deepest decline experienced by the JCI this Friday occurred when regional stock indexes actually strengthened. This situation was caused by a number of factors.

The factors in question are related to policy uncertainty in the United States and lower-than-expected national economic growth. There is also negative sentiment from the exit of conglomerate stocks such as PT Barito Renewables Energy Tbk (BREN), PT Petrosea Tbk (PTRO), and PT Petrindo Jaya Kreasi Tbk (CUAN) from the list of MSCI index candidates.

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The biggest pressure also occurred in banking. Shares of major banks such as PT Bank Central Asia Tbk (BBCA), PT Bank Mandiri Persero Tbk (BMRI), and PT Bank Negara Indonesia Persero Tbk (BBNI), experienced a sharp correction after the Q4-2024 financial report showed a slowdown in profits.

BCA, which still recorded a profit growth of 12.7 percent in the fourth quarter of 2024 on an annual basis, actually fell 3.1 percent on a quarterly basis. Meanwhile, BNI's profit, which grew 2.7 percent on an annual basis, eroded minus 8 percent on a quarterly basis.

Meanwhile, Bank Mandiri's profit in Q4-2024 fell 11 percent compared to the previous quarter. Its annual profit growth was only 1.3 percent.

"Uncertainty in this sector has also dragged the JCI deeper, considering the large weight of banking stocks in the index," Hendra told Kompas.

Given this condition, the pressure on the JCI is expected to continue in the next few days. This is especially if there is no positive catalyst that can offset negative sentiment from within the country.

"However, the correction that occurred could also open up opportunities for investors who are starting to look for stocks with attractive valuations," he said.

Media issuers, according to Hendra, have defensive prospects amid the market downturn, especially with the shift in trends to digital that opens up new growth opportunities. Sharia banking issuers also have attractive prospects in the sharia banking industry, which continues to grow with an aggressive expansion strategy.

Amid this uncertainty, he advised investors to be cautious in making short-term investment decisions and implement strict risk management strategies.

"A gradual approach in collecting stocks with strong fundamentals can be a wise move, while continuing to monitor global developments and domestic economic policies that will be determining factors for the future direction of the market," he said.

Capital market analyst from PT Infovesta Utama, Wawan Hendrayana, assessed that the 6,700 level is a reasonable support or lowest level after the JCI had touched its all-time high of 7,900 on September 19, 2024. Historically, according to him, the JCI which was shaken by negative sentiment could be corrected by up to 20 percent from its highest level.

"Volatility in the stock market is normal," said Wawan when contacted separately.

He assessed that the selling of shares by foreign investors could still come back. Because, fundamentally, issuers in Indonesia are still posting profitability.

However, the strategy he suggests investors implement when the stock market is volatile is to diversify investment funds into money market assets or fixed income, while wait and see or monitoring macroeconomic developments.

"For investors who do not yet have a stock position, this is a good opportunity for stock-picking or buying stocks with good fundamentals such as big banks that are undergoing correction," he said.

For those who already have a stock portfolio, Wawan said, investors can consider their liquidity needs. If investors are still considering dividends from issuers that are still profitable, then holding stocks for the long term can be done. However, if there is a short-term need, then selling at a loss or cutting losses on stocks can be considered.