IHSG Breaks 6,400 Level, Purbaya: Time to Buy the Dip

Jakarta, CNBC Indonesia - Finance official Purbaya Yudhi Sadewa has commented on the current state of the Indonesian capital market. He expressed no concern regarding the corrections occurring today, suggesting instead that the current conditions present an opportunity for investors to purchase shares in the Indonesian capital market.

The IHSG began today’s trading down 94.34 points or 1.40% to the 6,447.97 level. However, two minutes after the market opened, the IHSG dropped further by 2.59%, and the decline worsened 60 minutes later, with the index plunging 4.3% to the 6,428 level.

Purbaya believes that today’s weakening of the IHSG should not be a cause for concern as the Indonesian economy continues to grow strongly. He noted that the country is far from a recession, contrary to fears of a repeat of the 1997-1998 crisis, even though the Rupiah had briefly breached the Rp17,660/US$ level, according to Refinitiv.

“There are many sentiments at play; if the Rupiah weakens, it feels as though we are moving towards a 97-98 scenario again. However, 97-98 was different because policies were incorrect and socio-political instability occurred after a year of recession. In mid-97, we were already in recession. Currently, we are not in a recession; the economy is still growing strongly, so there is still room to rectify everything,” said Purbaya.

“Therefore, fellow stock market investors do not need to worry. If I say there is no need to be afraid, then it is time to ‘buy the dip’ (purchase stocks at low prices) now,” he added.

Purbaya also provided a technical outlook, suggesting that stock movements will rebound within the next one to two days.

“From a technical perspective, I see it returning in a day or two,” he said.

Furthermore, he stated that the Ministry of Finance is undertaking efforts to stabilise the Rupiah by activating the Bond Stabilisation Fund (BSF). This instrument is utilised to absorb government bonds released by investors to prevent panic in the bond market.

“We will also be entering the bond market starting today. We have already entered slightly, but from today, we will enter more significantly so that the bond market remains controlled. This ensures that foreign holders of bonds do not exit due to fears of capital losses from falling bond prices. This will be able to assist the movement of the Rupiah,” said Purbaya.