IHSG falls as investors await MSCI market classification

The Indonesia Stock Exchange (IDX) composite index (IHSG) closed lower on Monday, falling 60.45 points or 0.98 percent to 6,116.69, as investors awaited the market classification decision for Indonesia by MSCI. The LQ45 index of 45 leading stocks also dropped 10.20 points or 1.67 percent to 599.20. Associate Director of Research and Investment at Pilarmas Investindo Sekuritas, Maximilianus Nico Demus, said the IHSG’s decline came amid mounting market concerns over the potential for further monetary policy tightening by central banks, a downgrade in MSCI’s assessment of Indonesia’s Information Flow accessibility, and the removal of several domestic stocks from FTSE Russell indices. Domestically, investors are taking a wait-and-see approach ahead of MSCI’s Annual Market Classification Review announcement, scheduled for Wednesday morning Indonesia time. Through this announcement, MSCI will decide whether to maintain Indonesia’s equity market classification as an Emerging Market or downgrade it to Frontier Market. Nico noted that a downgrade could potentially trigger large-scale foreign capital outflows from Indonesia’s financial markets. From overseas, Asian regional bourses moved variably amid ongoing uncertainty over the conflict between the United States and Iran, which escalated again over the weekend. Meanwhile, the People’s Bank of China kept its benchmark lending rate unchanged for the 13th consecutive month, reflecting a cautious stance amid signs of slowing household consumption and investment. After opening higher, the IHSG moved into negative territory through the close of the first trading session and remained in the red until the final bell. Based on the IDX-IC sectoral indices, two sectors gained: energy rose 1.47 percent and technology edged up 0.18 percent. Nine sectors declined, with basic materials falling the most at 2.49 percent, followed by industrials and healthcare, which dropped 2.36 percent and 2.23 percent respectively. Stocks recording the largest gains included ZONE, EMDE, KIOS, BYAN and ADES, while the biggest losers were BAIK, BINA, HBAT, LUCY and UDNG. Trading frequency reached 1,709,000 transactions, with 20.95 billion shares traded worth Rp13.47 trillion. Overall, 227 stocks advanced, 471 declined and 261 were unchanged. Among regional Asian markets, the Nikkei index strengthened 1.86 percent to 72,572.00, the Shanghai index rose 1.78 percent to 4,163.10, the Hang Seng index weakened 0.65 percent to 23,768.52, and the Strait Times index gained 0.22 percent to 5,204.01.