IHSG Potentially Volatile Ahead of Weekend Amid Mixed Sentiments
The Jakarta Composite Index (IHSG) on the Indonesia Stock Exchange (BEI) has the potential to move volatilely on Friday, triggered by a combination of domestic and global sentiments. The IHSG opened down 10.88 points, or 0.18 percent, at 6,161.46. Meanwhile, the LQ45 index of 45 leading stocks fell 2.37 points, or 0.38 percent, to 614.55.
From the domestic front, MSCI for the first time explicitly downgraded Indonesia’s Information Flow score from ‘+’ to ‘-’, linking it to issues of share ownership transparency, free float, and coordinated trading behaviour that disrupts price discovery. This report serves as a warning signal that if market governance, free float transparency, and price formation quality do not improve, Indonesia’s valuation discount could persist longer and become one of the reasons foreign funds remain reluctant to return aggressively. Investors are also awaiting the next announcement, the MSCI Annual Market Classification Review, on Wednesday next week.
Yesterday, Bank Indonesia (BI) again raised the BI Rate by 25 bps to 5.75 percent, marking the third increase in about a month as a measure to maintain Rupiah stability amid global turmoil and ensure inflation remains within the target of 2.5 plus minus 1 percent in 2026-2027.
From overseas, market sentiment is currently determined by two opposing forces. On one side, the peace agreement between the United States (US) and Iran signed in Versailles, France, supports risk appetite, lowers energy prices, and reduces the risk of global supply disruptions. On the other side, the new leadership of Kevin Warsh at the Fed reinforces the higher-for-longer narrative after the latest dot plot, which indicated the possibility of additional interest rate hikes this year. Warsh also announced the formation of several task forces to evaluate the Fed’s communication, the central bank’s balance sheet, the use of economic data, productivity and labour in the AI era, as well as the inflation framework. Citi assesses that the combination of a more hawkish dot plot, reduced political pressure from Donald Trump on the Fed, and the absence of near-term AI policy implications are the main factors strengthening the US Dollar.
On Thursday, European stock markets moved variably, with the Euro Stoxx 50 strengthening 0.29 percent, the UK’s FTSE 100 index weakening 1.14 percent, Germany’s DAX index strengthening 0.37 percent, and France’s CAC 40 index strengthening 0.44 percent. Meanwhile, US Wall Street markets closed uniformly higher on Thursday, with the Dow Jones Industrial Average strengthening 0.14 percent, the S&P 500 index strengthening 1.08 percent, and the Nasdaq Composite index strengthening 2.48 percent. Regional Asian stock markets this morning saw the Nikkei index strengthen 0.20 percent to 71,197.00 and the Strait Times index strengthen 0.35 percent to 5,194.45, while the Shanghai and Hang Seng indices were closed for the Dragon Boat Festival holiday.