Investment Strategies Amid JCI Pressure: Cut Loss or Average Down?
The recent sluggish performance of the Indonesian capital market poses a risk of increasing losses for investors. Consequently, implementing strict investment strategies has become essential to minimise investor losses in the Indonesian market.
During an event titled ‘How to Recover Your Portfolio: Hold, Average Down, or Cut Loss’, Sinarmost Sekuritas predicted that the Jakarta Composite Index (JCI) will continue to face selling pressure in the near future. Recommended investment strategies for investors include fast trading or swing trading.
Ike Widiawati, Head of Retail Research at Sinarmas Sekuritas, explained that investors can actually capitalise on market downturns. If the JCI corrects by 2–4%, swing trading can be executed with the expectation of a short-term technical rebound.
“The selling pressure on the JCI remains quite heavy, so robust strategies like fast trading or swing trading may be utilised to take advantage of technical rebounds. As for holding positions, it is advisable to wait and implement gradual, staggered purchases rather than committing all cash at once,” Ike stated during the event on Saturday.
Ike further explained that for investors experiencing floating losses of even tens of percent, cutting losses can be a viable option, depending on the investor’s risk tolerance. This is particularly relevant as Sinarmas Sekuritas predicts the JCI’s performance will remain under pressure. Several sentiments are expected to shadow the index’s movement, most notably the Rupiah, which is currently viewed as a game-changer for the index’s trajectory.
“In the current condition, regardless of the percentage of loss, we must minimise it because our assets will continue to decline if we do not cut losses. Once the price drops further, we can perform a buyback at a lower level,” she added.
Ike noted that long-term buy strategies can be implemented once selling pressure eases and the JCI begins a recovery phase. This recovery must be accompanied by stable exchange rate conditions and Indonesia’s status within the MSCI index.
Various domestic and international sentiments are currently influencing the Indonesian stock market. Domestically, the pressured Rupiah, uncertainty regarding government policy directions, and the risk to Indonesia’s market status in the eyes of MSCI are key focuses. Internationally, heating geopolitical tensions, the direction of US Federal Reserve interest rates, and additional US import tariffs are critical factors for investors to monitor.
Tactical strategies in this environment include capitalising on technical rebounds from stocks associated with the Prajogo Pangestu group, former MSCI constituents, and the Hapsoro group. However, Ike emphasised that these accumulation strategies are not intended for the long term.
“The Prajogo Pangestu group remains okay, and we can monitor former MSCI issuers during price drops to enter occasionally. When they rebound, exit all positions; do not hold them. We are only utilising technical rebounds. The Hapsoro group follows the same principle,” she said.
Additionally, investors are advised to monitor stocks being re-accumulated by foreign investors. However, under current conditions, Sinarmas Sekuritas maintains that technical rebounds remain the primary recommendation.
“We can look at stocks collected by foreign investors. When the market declines, we can observe what foreigners are buying. Once those stocks rebound, exit all positions. Do not hold them for more than one week; that is far too long given the current conditions,” she concluded.