IHSG falls 4 per cent as investors adopt "risk off" stance amid oil price surge

Jakarta — Senior Technical Analyst at PT Mirae Asset Securities Nafan Aji Gusta stated that the weakness in the Composite Stock Price Index (IHSG) continues to be influenced by ongoing sentiment from the conflict between the United States and Israel versus Iran.

The escalation of warfare has triggered a surge in global oil prices, prompting global investors to adopt a risk-off stance (reducing risky assets) and shift towards safe-haven assets.

“The IHSG’s movement remains influenced by negative sentiment from the US-Iran conflict, which is driving global investors to reduce risk appetite and shift towards safe-haven assets,” said Nafan when contacted by Antara in Jakarta on Monday.

On Monday, 9 March at 10:17 Western Indonesian Time, the price of WTI crude oil rose 24.51 per cent to 113.18 US dollars per barrel, whilst Brent crude oil rose 23.06 per cent to 114.06 US dollars per barrel.

The surge in oil prices increases the risk of inflation at a global level, potentially causing global interest rates to remain elevated for an extended period. Additionally, the spike in oil prices could dampen economic growth through increases in fuel prices and production costs.

Domestically, Nafan noted that Fitch Ratings’ downgrade of Indonesia’s credit outlook from “stable” to “negative” has raised investor concerns regarding the government’s fiscal policy direction and macroeconomic stability.

With this combination of sentiments, Nafan recommended market participants to be selective in allocating their investments, focusing on fundamentally solid stocks while maintaining disciplined risk management.

“Focus on quality stocks with solid fundamentals, focus on undervalued stocks, focus on stocks showing a trend reversal, and employ disciplined risk management,” said Nafan.

Trading data from the first session on Monday, 9 March at 10:17 Western Indonesian Time showed the IHSG weakening by 307.52 points or 4.05 per cent to 7,278.16, in line with weakening stock exchanges across the Asia region.

At the same time, regional Asian stock exchanges saw the Nikkei index decline 3,880.30 points or 6.98 per cent to 51,740.10, the Shanghai index decline 48.18 points or 1.17 per cent to 4,076.35, the Hang Seng index decline 680.15 points or 2.64 per cent to 25,077.98, and the Straits Times index decline 129.75 points or 2.68 per cent to 4,718.98.