Consumer Stocks Hold Amid Weakening IHSG

JAKARTA, KOMPAS - Shares of basic necessities companies are considered to be relatively stable amid the weakening stock market due to the heavy outflow of foreign investors. The stability of this sector is expected to be maintained ahead of Ramadan, although public demand is still overshadowed by economic slowdown.

The stock market continued to weaken until the third week of February 2025. The Composite Stock Price Index (IHSG) at the close of trading on Friday (14/2/2025) closed at the level of 6,638, weakening by 1.54 percent from 6,752 in the previous week with a net selling value of foreign investors reaching Rp 3 trillion.

Since the beginning of 2025, the level of the Jakarta Composite Index (IHSG) has already decreased by 6.2 percent due to the pressure of net selling by foreign investors amounting to IDR 10.52 trillion. The effects of U.S. President Donald Trump's policies, the unpredictable direction of U.S. interest rate reduction policies, the economic growth slowdown, and the new Indonesian government's policies have all been factors contributing to the stock market's decline.

Stocknow.id Capital Market Analyst Hendra Wardana told Kompas on Sunday (2/16/2025) that in this situation, stocks from the daily consumer sector or perishable goods are still relatively resilient. "This is because demand for daily necessities remains stable, especially ahead of Ramadan and Eid al-Fitr, when public consumption increases significantly," he said.

Several issuers that have the potential to benefit, according to Hendra, are PT Indofood CBP Sukses Makmur Tbk (ICBP), PT Sumber Alfaria Trijaya Tbk (AMRT), and PT Japfa Comfeed Indonesia Tbk (JPFA).

ICBP, whose price has grown by 1.32 percent since the beginning of the year to Rp 15,525 per share, is expected to continue to grow strongly domestically. Its instant food products are considered to remain a primary necessity for the community. With product diversification and good pricing strategies, ICBP can maintain its profit margins.

Meanwhile, the stock price of AMRT, as the largest minimarket operator in Indonesia, also has the potential to grow despite having corrected by 2.41 percent since the beginning of the year. This is because the service acts as a proxy for the basic needs of the community, which will remain high throughout Ramadan, predicted to start in early March 2025.

The shares of JPFA issuers, which have grown by 2 percent since the beginning of this year, also have the potential to continue strengthening due to the increased consumption of animal protein during Ramadan, especially chicken meat and its processed products.

Such stocks, according to him, will be targeted by foreign institutional investors who tend to seek defensive stocks with already low prices, compared to retail investors whose preferences are more varied.

"Overall, even though the JCI is in a weakening trend, consumer staple stocks remain resilient due to stable and increasing demand during Ramadan," he said.

A similar analysis was also expressed by Mirae Asset Sekuritas Research Analyst, Abyan Habib Yuntoharjo, in an analysis presentation entitled "Consumer Trends for the 2025 Fasting Month: Building Smarter Investors", in Jakarta, Thursday (13/2/2025).

"Stocks like ICBP's domestic growth is still robust. Second, AMRT is a proxy for consumer staples. They can maintain margins, can still sell and people will still shop," said Abyan.

Abyan assessed that the strength of consumer stocks was not only supported by the increase in seasonal demand ahead of Ramadhan, but also due to the government's program to maintain the purchasing power of the lower middle class.

The program, one of which is through a 50 percent electricity tariff discount for customers up to 2,200 VA (volt ampere) during January-February. This stimulus in January contributed to monthly deflation of the Consumer Price Index (CPI) by -0.76 percent, from 106.80 in December 2024 to 105.99 in January 2025.

Another program that is expected to help people's purchasing power is food assistance to 16 million Beneficiary Families (KPM) in the form of 10 kilograms of rice for two months. The distribution, which was originally scheduled to be distributed in January-February, was reportedly postponed for several months to maintain rice prices at the farmer level.

"How big is the impact? If we do a rough calculation, they (beneficiaries) can save Rp150,000 - Rp170,000 per month because of this electricity tariff discount. If we look at these two things alone, it can help the lower middle class in buying daily necessities, not only in primary goods, but also in secondary goods," he said.

On the other hand, Abyan also reminded investors to continue to consider factors such as decreasing market expectations, such as worsening macroeconomics and weakening people's purchasing power.

The worsening macroeconomic situation has so far weakened the rupiah exchange rate against the US dollar. On Friday (14/2), the rupiah exchange rate was at Rp16,260, after fluctuating in the range of Rp16,253 to Rp16,308 per US dollar. This condition could also increase the price of basic commodities, some of which are also affected by other factors, such as climate and distribution disruptions.

"The existence of factors below expectations likely comes from two things, first the price of raw materials that are still rising. Apparently, there is still pressure from the price of raw materials, then also pressure from the dollar that is still strengthening," said Abyan.

The weakening purchasing power factor can also be a threat. Reflecting on the Bank Indonesia Consumer Confidence Index (IKK) data for the January 2025 period, there was a decrease in the index from 127.7 in December 2024 to 127.2 in January 2025.

Although the index still shows consumer optimism about the economy, the movement of the CCI in January 2025 is opposite to the CCI in the same months in 2023 and 2024, which increased from December in the previous year.

This decline is reflected in the majority of community groups based on their spending levels. From the data, only community groups with spending of IDR 2.1-3 million experienced an increase in IKK from 119.1 to 126.6. Meanwhile, communities with spending levels above IDR 5 million per month experienced the deepest decline in IKK of up to 5 points.