IHSG likely volatile as MSCI index rebalancing prompts portfolio adjustments

JAKARTA (ANTARA) - The Indonesia Stock Exchange Composite Index (IHSG) is likely to be volatile on Friday as portfolio adjustments by fund managers follow the MSCI index rebalancing effective after today’s trading session. The IHSG opened down 17.42 points, or 0.28%, at 6,112.77. Meanwhile, the LQ45 blue-chip index fell 10.51 points, or 1.69%, to 609.89. “Today’s trading is still likely to be fluctuating with a tendency towards volatility,” said Ratna Lim, Head of Research at Phintraco Securities, in her analysis in Jakarta on Friday. Domestically, the effective date for the MSCI index rebalancing will take effect after today’s trading session on Friday (29 May), which could prompt global fund managers following the MSCI index to adjust their portfolios. “This could lead to massive selling, particularly of stocks removed from the MSCI index, and trigger increased market volatility,” Ratna said. On the domestic front, the government is preparing an intensive scheme for electric vehicles using nickel-based batteries. One option under discussion is for the government to cover the value-added tax (VAT), with rates varying from 40% to 100%. Schemes will differ for nickel-based and non-nickel batteries, with nickel-based vehicle batteries likely to receive larger incentives. However, the incentives are still under discussion and their implementation will be delayed by one month. This could become a positive factor for issuers producing nickel-based electric vehicle batteries in the future. Internationally, market sentiment was bolstered by reports of a potential 60-day ceasefire extension between the United States and Iran, which could temporarily ease geopolitical risks in the Middle East. Despite not yet receiving final approval from US President Donald Trump, the market responded positively to the negotiations. Meanwhile, oil prices moved variably with decreasing volatility, reflecting market expectations of potential global energy supply stabilisation. On Thursday (28 May), European stock markets all declined, with the Euro Stoxx 50 down 0.27%, the UK’s FTSE 100 down 0.75%, Germany’s DAX down 0.34%, and France’s CAC 40 down 0.23%. Meanwhile, US Wall Street markets rose on Thursday (28 May), with the Dow Jones Industrial Average up 0.05%, the S&P 500 up 0.58%, and the Nasdaq Composite up 0.84%. Asian regional markets this morning saw the Nikkei up 1,195.38 points, or 1.85%, to 65,888.50; the Shanghai Composite down 18.31 points, or 0.45%, to 4,080.32; the Hang Seng up 68.34 points, or 0.27%, to 25,074.50; and the Straits Times Index up 36.54 points, or 0.73%, to 5,025.73.