IDX Correcting, Economist: Market Conditions Have Not Entered Panic Phase

Dipo Satria Ramli, an economist from the Centre of Reform on Economics (CORE) Indonesia, assessed that the correction of the Indonesia Composite Index (IHSG)—which fell approximately 250 points or 3.73% to the 6,472 level on Monday—does not yet indicate widespread panic selling in the market. According to him, the weakening is considered a reasonable market adjustment in response to changes in global index compositions, including the impact of removing several stocks from benchmark indices such as Morgan Stanley Capital International (MSCI) and FTSE Russell.

This situation has left the market searching for a new equilibrium, with selling pressure concentrated on specific stocks that are weighing down the index. “This condition does not yet reflect widespread panic selling,” Duala told Media Indonesia on Monday. He explained that the primary drivers of the IHSG’s decline during today’s trading were domestic and technical factors rather than global sentiment. The greatest pressure, he continued, stemmed from selling actions on stocks affected by removal from the MSCI index and potential adjustments by FTSE related to high shareholding concentration and low free float, particularly among several large-cap stocks.

While acknowledging that external factors still exert influence, he noted they were not the primary driver of the market’s decline during the morning session. “Up to this point, there are no indications of a broad-based global risk-off sentiment, which typically triggers more even pressure across all sectors,” he concluded. Analysts have also highlighted the weakening of the Rupiah to Rp17,676 per USD and capital outflows as contributing factors to the market volatility.