IHSG Slumps 3.54 Percent as Commodities and Energy Stocks Lead Declines

The Jakarta Composite Index (IHSG) on the Indonesia Stock Exchange (BEI) closed weaker on Thursday afternoon, pressured by shares in the commodities and energy sectors. The IHSG closed down 223.56 points or 3.54 percent at 6,094.94. Meanwhile, the LQ45 index of the 45 leading stocks fell 14.28 points or 2.26 percent to 616.40.

Fixed Income and Macro Strategist at PT Mega Capital Indonesia, Lionel Priyadi, said the main sentiment behind the IHSG’s weakness stemmed from plans to centralise commodity exports through export-focused state-owned enterprises, which are seen as potentially affecting companies and market players.

“The main sentiment behind the IHSG’s weakness comes from plans to centralise commodity exports by export-focused state-owned enterprises, which are regarded as harming companies and shareholders. The negative sentiment comes from both domestic and foreign investors,” he said when contacted in Jakarta on Thursday.

Market participants domestically and abroad responded to plans to issue Government Regulation (PP) on Governance of Exports of Natural Resource Commodities (SDA), including provisions regarding BUMN as sole exporter of several strategic commodities.

The market is also watching the establishment of PT Danantara Sumberdaya Indonesia (DSI) as a BUMN dedicated to exporting the natural resources sector.

PT DSI sits directly under the Badan Pengelola Investasi (BPI) Danantara with the task of strengthening governance of exports for several strategic commodities such as crude palm oil (CPO), coal, and ferro alloys.

One reason for the establishment of the special export state-owned enterprise is the alleged practice of under-invoicing exports of commodities, which is said to harm the state by up to Rp 15,400 trillion over 34 years.