JCI Plunges, Analysts Reveal the Causes

The Indonesia Composite Index (IHSG) reversed course to weaken by almost 3% during the first trading session of this pre-weekend period, after initially opening higher. This decline occurred amidst selling pressure that dominated the majority of stocks on the Indonesia Stock Exchange (IDX).

At the end of the first session, the IHSG fell by 2.73%, or a correction of 164 points, to the level of 5,835.11. Throughout today’s trading, the index briefly touched a high of 6,045 before reversing to hit a low of 5,830.

Lukman Leong, an analyst at Doo Financial Sekuritas, stated that the weakness in the Indonesian stock market today was driven by global risk sentiment, which triggered selling in the artificial intelligence and technology sectors. “I see this decline following the global risk-off sentiment caused by the sell-off in AI and tech stocks,” he told CNBC Indonesia on Friday.

According to him, the influence of this sentiment is quite strong as it affects major Asian exchanges and US index futures. Furthermore, the MSCI announcement continues to make investors, particularly foreign ones, hesitant to return, given the ongoing risk of a downgrade this coming November.

Similarly, MNC Sekuritas analyst Herditya noted that the IHSG correction aligns with the movement of most regional Asian exchanges, which have corrected due to the sell-off in technology issuers. “This correction in the IHSG is in line with what we stated in our technical report this morning, where technically the IHSG movement is still in a downtrend phase,” he said when contacted by CNBC Indonesia.

Another sentiment is that investors tend to adopt a ‘wait and see’ approach regarding future Federal Reserve decisions, which are expected to remain ‘higher for longer’. On the other hand, IHSG sentiment is also influenced by commodity prices, specifically the correction in crude oil and gold prices, which is expected to affect the movement of correlated issuers.