IHSG Plunges 2.42% Amid Thin Trading and Rating Downgrade Fears

The Jakarta Composite Index (IHSG) slumped back into the red on Tuesday afternoon, falling 2.42% or 141.04 points to 5,679.75. The majority of stocks declined on thin volume. A total of 618 stocks were in the red, 103 in the green, and 238 remained stagnant. Transaction value was still relatively quiet and concentrated in just two stocks, BBCA and PANI, which accounted for 61.5% of trading. Unlike the previous day, selling pressure hit the IHSG immediately from the opening bell. Based on market data, the IHSG moved in a range of 5,638.57 to 5,811.67. For context, the IHSG closed at 5,820.79, down 1.28%, in the previous session. Citing Refinitiv data, BBCA was the main drag with a weight of -18.73 points, followed by BBRI at -9.41 points and ASII at -6.78 points. On the other side, no stocks had significant weight to stem the IHSG’s plunge. Doo Financial Sekuritas analyst Lukman Leong said negative sentiment regarding the review results from global rating agencies had not yet recovered. ‘Although the rupiah has stabilised, the potential for a market status downgrade still exists,’ he told CNBC Indonesia on Tuesday. Furthermore, geopolitical developments in the Middle East continue to suppress risk sentiment. ‘Foreign investors are merely engaging in choppy trade, entering and exiting within a short period,’ he said. A similar view was expressed by Pilarmas Investindo Sekuritas Associate Director Maximilianus Nicodemus, who said investors were still focused on the results of the S&P rating agency review. ‘Today’s sentiment is also more about waiting for the S&P rating,’ he stated. He added that other negative sentiment stemmed from the fact that negotiations between the United States and Iran have yet to find a breakthrough. ‘The US and Iran have started talks again, but we seem reluctant to invest,’ he added. Indonesia’s financial market will close trading for the first half of the year today. Heading into the second semester, the stock exchange is expected to recover. Regarding the war update, US and Iranian negotiating teams were originally scheduled to meet in Doha this week. However, Iran has confirmed there is no agenda for talks with the US, even though both countries have sent delegations to Qatar. Based on a memorandum of understanding, the two countries have at least 60 days to discuss Iran’s nuclear programme, highly enriched uranium reserves, and to draft a permanent ceasefire. However, the negotiation process is slow because both sides accuse each other of violating the agreement. Meanwhile, the Dollar Index weakened to 101.1 on Monday, its lowest in the last five days. The weakening index indicates investors are selling their dollar assets. This condition is expected to be good news for the rupiah as there is potential for inflows from foreign investors into the Garuda currency.