IHSG Weakens Since Early March 2026, What's Behind It?
JAKARTA — Indonesia’s composite stock index (IHSG) came under pressure from the beginning of March 2026 through to the close of trading on Friday 6 March 2026. The index fell 124.850 points or 1.62 per cent to 7,585.687 level.
Previously, the IHSG also closed lower on Wednesday 4 March 2026, declining 4.57 per cent to 7,577 level.
The weakness was attributed to concurrent negative global and domestic sentiment, including escalating geopolitical tensions in the Middle East as well as concerns over budget deficits in Indonesia’s state budget (APBN).
Hendra Wardana, a capital market analyst and founder of Investor Republic, said the IHSG weakness since the beginning of this month was not a sudden movement. According to him, the stock market is currently responding to various risks developing at global and domestic levels, making investor sentiment highly sensitive.
“The pressure recurring on the IHSG, which fell to around the 7,500 level in early March 2026, did not happen suddenly. This condition is a combination of global and domestic pressures occurring simultaneously, making market sentiment extremely sensitive,” Hendra told Kompas.com on Monday 9 March 2026.
From an external perspective, escalation of the conflict between the United States and Israel against Iran became the primary factor triggering uncertainty in global financial markets. This geopolitical tension drove a surge in global energy prices, particularly Brent crude oil, which briefly breached 93 US dollars per barrel.
The rise in global oil prices placed additional pressure on countries that remain dependent on energy imports, including Indonesia. As a net importer of oil, the surge in global energy prices has the potential to increase pressure on the trade balance and affect the stability of the rupiah’s exchange rate.
Furthermore, rising oil prices could also increase the burden of energy subsidies in the state budget. This condition raised concerns among investors as it could narrow the government’s fiscal space.
“For countries like Indonesia that remain net importers of oil, this increase in global energy prices represents negative sentiment as it could increase pressure on the trade balance, the rupiah’s exchange rate, and the burden of energy subsidies in the APBN,” he explained.
Based on data from Indonesia’s Stock Exchange (BEI), foreign investors disposed of their shareholdings in a number of stocks on Friday of last week. The total net sale by foreign investors (net sell) reached 261.13 billion rupiah. Meanwhile, throughout the period of 2–6 March 2026, net purchases by foreign investors (net buy) reached 1.79 trillion rupiah.
On the domestic side, the market also began to scrutinise the government’s fiscal condition. As of February 2026, the state budget was recorded as having a deficit of approximately 135 trillion rupiah. Hendra believes that if global oil prices remain at high levels, the government faces a rather difficult policy choice.
On the one hand, the government could increase energy subsidies to maintain stability in domestic fuel prices. However, such a step could potentially widen the budget deficit.
On the other hand, if the government decides to raise fuel prices to reduce the subsidy burden, this step could trigger inflation and suppress public purchasing power.
“If global oil prices remain at high levels, the government faces a policy dilemma between increasing energy subsidies, which will widen the budget deficit, or raising fuel prices, which could potentially drive inflation and suppress public purchasing power,” Hendra concluded.