IHSG Falls Nearly 6 Per Cent in a Week; Analysts Reveal the Root Cause
Jakarta — Indonesia’s composite stock index (IHSG) experienced significant pressure during the trading week of 9-13 March 2026, declining 5.91 per cent amid heightened pressure from global and domestic sentiment.
Concurrent with the index’s weakness, foreign investors recorded net selling of Rp 1.2 trillion in the regular market.
Equity Analyst at PT Indo Premier Sekuritas (IPOT), Hari Rachmansyah, said the IHSG’s weakness was primarily driven by escalating geopolitical tensions between the United States and Iran, which continue to persist.
According to him, the conflict escalation triggered a surge in energy commodity prices such as oil and coal, subsequently raising market concerns about potential global inflation spikes and the possibility of prolonged tighter global monetary policy.
The measure was taken to ensure the fiscal deficit remained below 3 per cent of gross domestic product (GDP).
“The combination of global uncertainty and fiscal policy caution is driving investors to adopt a risk-off stance, thereby suppressing IHSG movement throughout last week,” said Hari Rachmansyah in a press statement on Monday (16/4/2026).
Hari noted that major Wall Street indices such as the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite remain potentially under pressure.
This is reflected by American equity index futures contracts, which continue to move weakly, thus indicating potential continued selling pressure at the beginning of the week.
This negative sentiment is primarily triggered by heightened uncertainty over global energy supplies following continued spikes in West Texas Intermediate crude oil prices.
Statements from Iran’s new leadership making the closure of the strait an instrument of pressure against opposing nations have further heightened market concerns about potential disruptions to global energy supplies and their inflationary impact.
“Nevertheless, recent developments show a different nuance after Iran’s Foreign Minister Abbas Araghchi stated that the Strait of Hormuz remains”open for vessels not originating from the United States, Israel, and their allies,” Hari explained.
He believes this geopolitical dynamic is prompting global investors to maintain a risk-off stance in the near term, hence US market volatility is expected to remain elevated whilst geopolitical uncertainty and global energy supply stability show no signs of abating.
Meanwhile, from the domestic perspective, market sentiment is estimated to be influenced by fiscal and monetary policy dynamics amid rising global energy commodity prices.
Spikes in oil and coal prices have the potential to increase pressure on government fiscal accounts, thereby driving the need for swift measures to keep the budget deficit under control.
If the fiscal deficit continues to widen, several risks may emerge, ranging from increased government debt financing requirements, pressure on government bond yields, to potential rupiah depreciation stemming from heightened investor risk perception regarding fiscal stability.
Additionally, a wider deficit may also narrow fiscal stimulus space amid global economic uncertainty.
On the monetary policy front, market participants will also monitor the results of Bank Indonesia’s Board of Governors Meeting in the coming week.
By consensus, the central bank is expected to maintain the BI-Rate benchmark interest rate to preserve exchange rate stability and inflation control amid rising external pressures.