6 Factors Making IHSG Recovery Difficult, Investor Profits Increasingly Elusive
Jakarta, CNBC Indonesia - The Composite Stock Price Index (IHSG) faced significant selling pressure once again during this weekend’s trading. Closing the session on Friday (24/4/2026), Indonesia’s benchmark capital market index was trimmed by 3.06% and slumped to the level of 7,152.85.
This sharp decline is not a momentary anomaly but the peak of various accumulated negative sentiments over recent times that could still experience further drops due to several domestic and international factors.
Market participants are currently confronted with a combination of macroeconomic challenges, foreign capital flow dynamics, and unfavourable technical indicators. There are six crucial interconnected factors that serve as the main drivers of the current market weakness.
- Outlook Adjustment
Recent government policies focused on executing strategic programmes have implications for the risk posture in the financial sector. Credit rating agencies have begun taking anticipatory steps by adjusting the prospects or debt outlook.
Agencies such as Fitch Ratings and Moody’s, along with several other financial institutions like major US banks (JP Morgan, Goldman Sachs), have rated Indonesia as in an “underweight” position.
This outlook downgrade triggers caution among institutional investors, becoming an initial burden on market fundamentals before accumulating with other external sentiments.
- Massive Outflow in Financial Stocks
The correction experienced by the IHSG is inseparable from the persistent net selling actions by foreign investors. Throughout the year to date (YTD), the domestic stock market has recorded highly aggressive capital outflows from foreign funds.
It should be remembered that the IHSG has a very significant dependence on the movements of big-cap banking stocks, as they are the highest contributors to index points for the index price.
These funds have specifically been withdrawn from big-cap banking stocks that have long been the main supporters of IHSG liquidity.
The value of outflows in this crucial sector has even breached Rp 35 trillion. Given the large weight of banking stocks on the index, the selling pressure on this sector automatically drags the IHSG into the red zone.
- Breaking of Key Technical Support Levels
From a technical analysis perspective, the IHSG’s current posture shows a continuing weakening trend after breaching the psychological support level of 7,500 and the historical support level of 7,300.
This pressure indication has actually been confirmed since the monthly chart close in March, which ended in a bearish zone.
Although the daily chart currently shows emerging signs of an attempt to form a pivot turning point, this movement is not supported by adequate trading volume.
The large liquidity withdrawn by foreigners makes the buying power of domestic retail investors insufficient to stem the downward momentum.
Rupiah Depreciation and the Threat of Double Losses
The weakening of the rupiah exchange rate against the US dollar worsens the equity market situation. Currently, the rupiah exchange rate has depreciated and has even reached the level of Rp 17,300 per US dollar.
Compared to the position at the beginning of 2026, which was still around Rp 16,670/US$, the rupiah has weakened by 3.66% YTD.
For foreign investors, this domestic currency depreciation creates the risk of double losses. They not only face potential asset value declines from falling stock prices but also exchange rate losses when the portfolio is converted back to the original currency, thus triggering escalated selling actions.
- Extreme Reversal of Foreign Funds Direction
The severity of the index correction can be seen from how quickly foreign investor sentiment has reversed in recent months. Based on capital flow movement data as of 23 April 2026, the accumulated foreign net sell YTD has swelled to Rp 40.86 trillion (with Rp 20 trillion on 26 March 2026 transaction ownership changes) or a net of around Rp 20.86 trillion.
This figure represents an extremely drastic positional change if compared to data on 15 January 2026, when the Indonesian stock market still recorded a net inflow of Rp 7.30 trillion YTD.
This rapid shift from a surplus to a massive deficit indicates a total capital outflow movement from mid-January 2026 that has reached Rp 28 trillion.
- Oil Price Surge and Interest Rate Direction
Beyond domestic dynamics, the financial markets face threats from global macroeconomic shifts. Currently, there is a risk of structural inflation triggered by energy supply disruptions, where global oil supplies have halted by 20%.
Oil prices have already surged 48% since the Iran war. This price spike raises concerns about rising inflation, making it difficult for US interest rates to fall.
Although inflation statistics may lag in reflecting the direct impact of this supply shock, the market has already priced it in early.
With this potential inflation surge, the narrative of monetary policy easing or benchmark interest rate cuts becomes nearly impossible to realise.
Instead, the market is now recalculating the risk that central banks, both the Fed and Bank Indonesia, may pivot to tightening liquidity to maintain long-term economic stability.
In Indonesia, the oil price surge has already impacted the increase in non-subsidised fuel prices as of 18 April 2026.
- Middle East Escalation and Fragility of Ceasefire
The external sentiment currently most dominating market fears is the sustainability of geopolitical tensions in the Middle East.