JCI Plunges 4% to 5,594, Here is the Analysis of the Causes

The Jakarta Composite Index (JCI) on the Indonesia Stock Exchange (IDX) closed weekend trading on Friday (5/6) with a sharp correction. All stock sectors experienced massive selling pressure, dragging the index into the red.

The JCI recorded a significant decline of 245.01 points, equivalent to 4.20 percent, ending at 5,594.77. This weakening was also followed by the leading stock index LQ45, which fell 3.99 percent to the level of 557.75.

Head of Research at Phintraco Sekuritas, Ratna Lim, explained that the negative sentiment stemmed from internal uncertainty. ‘Several ambiguities in government policy and market rumours which were responded to negatively by the market again drove selling pressure on the Indonesian capital market,’ said Ratna Lim in her study in Jakarta, Friday (5/6).

Based on market data, there are three main domestic factors that triggered investor panic. All 11 sectors on the IDX ended in negative territory. The transportation & logistics sector recorded the deepest contraction at 5.75 percent, followed by the industrial sector (-5.64 percent) and the energy sector (-5.37 percent).

Stocks that were among the top gainers included MUTU, MMIX, CBPE, LFLO, and BTON. Meanwhile, stocks experiencing the deepest selling pressure (top losers) included WIFI, ARKO, RSGK, APIC, and RMKE.

Investors are advised to remain cautious ahead of the release of important economic data such as foreign exchange reserves for the May period, the consumer confidence index, and retail sales data. Ratna Lim projected that the bearish trend might still continue. ‘In the midst of minimal positive catalysts and under negative sentiment pressure, the JCI is estimated to potentially test the 5,500 level next week,’ added Ratna.

This domestic market condition is in line with the regional Asian trend. The Nikkei, Shanghai, Hang Seng, and Straits Times indices were also observed to have closed weaker on the same day.