IDX Composite Drops to 5,941.07 as Market Scrutinises Policy Credibility
The Indonesia Stock Exchange (IHSG) closed lower on Wednesday afternoon, as investors closely monitored the governance and credibility of Indonesian policies. The IHSG fell by 254.36 points, or 4.11 per cent, to the 5,941.07 level. Meanwhile, the LQ45 index, comprising 45 blue-chip stocks, dropped by 30.28 points, or 4.89 per cent, to 588.99.
After an initial gain at the market opening, the IHSG moved into negative territory by the end of the first session. In the second session, the index remained in the red until the close of trading. According to the IDX-IC Sectoral Index, all eleven sectors weakened, led by the basic materials sector, which fell by 9.31 per cent, followed by the energy and infrastructure sectors, which declined by 5.23 per cent and 5.01 per cent, respectively.
Trading frequency recorded 2,767,373 transactions, with 40.17 billion shares traded worth Rp25.25 trillion. In the regional market, the Nikkei rose by 1,742.76 points, the Shanghai index gained 8.87 points, and the Hang Seng fell by 405.11 points.
Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas, noted that the IHSG had plummeted to levels near 5,882, approaching its 2025 lows. Simultaneously, the Rupiah breached the Rp17,950 per US Dollar mark, and foreign investors recorded a net sell of Rp66.20 trillion year-to-date. “This condition feels increasingly stark when several global exchanges are still managing to record new highs,” said Liza in an analysis by Kiwoom Sekuritas.
According to Liza, the market is no longer questioning Indonesia’s capacity for growth, but rather its credibility. Five primary concerns are currently dominating investor sentiment: governance and credibility following negative outlooks from Moody’s and Fitch, Rupiah pressure approaching the 18,000 level, the shrinking middle class which serves as the engine of domestic consumption, and ongoing foreign outflows. Additionally, there is rising risk regarding leadership and policy communication in the eyes of global investors.
Liza suggested that while Indonesia might be entering a phase of structural de-rating, it is not certain. However, the market appears to be treating Indonesia differently from other emerging markets. The Indonesia ETF (EIDO) has recorded a return of -28.6 per cent since the start of 2025, whereas emerging markets have risen by +64.6 per cent, Vietnam by +63.2 per cent, and Taiwan by +107.2 per cent.
Investors are now focusing on two crucial weeks in June, involving the MSCI Global Market Accessibility Review and the FTSE Russell Global Equity Index Series Review. Following the assessments by Moody’s and Fitch, these reviews represent the next potential tests for the credibility of the Indonesian capital market. Liza noted that while many negative indicators have emerged—such as the weakening Rupiah and increased foreign outflows—Indonesia has maintained its investment grade status and stable outlook from S&P.
She warned that unpredictable and sudden policy changes could deal further blows to the market, as investors are still processing the implementation of various regulations. “The market is no longer looking for reasons to sell; it is looking for reasons to stop selling,” Liza concluded.