Middle East Conflict Escalation Threatens Indonesian Stock Index Below 8,000 Level
JAKARTA — The escalation of conflict between Iran, Israel, and the United States has transcended regional geopolitical concerns to emerge as a genuine global economic risk. As Middle East tensions intensify, markets have entered a risk-off phase, with global investors withdrawing from risky assets and redirecting capital towards safer instruments.
Hendra Wardana, a capital markets observer and founder of Republik Investor, characterised the Middle East conflict as no longer merely a political issue but rather a global economic risk factor. He noted that markets are responding with a pronounced risk-off pattern, as global investors exit riskier assets in search of safe-haven protection.
The immediate market reactions have been notable: gold prices have strengthened by more than 1 per cent, whilst WTI and Brent crude oil have risen nearly 3 per cent, driven by concerns regarding potential disruptions to Middle Eastern energy supplies.
The Strait of Hormuz has emerged as a critical focal point for market participants. This strategic waterway handles approximately 30 per cent of global oil trade, making it one of the world’s busiest oil distribution routes. Should the conflict escalation disrupt tanker traffic, crude oil prices could spike significantly as markets reassess supply-side risks.
The consequences extend beyond energy prices alone. Rising oil prices threaten to trigger global inflation, depress currency values, and influence central bank interest rate decisions across multiple economies. In this context, pressure on Indonesia’s capital markets becomes increasingly relevant and substantial.
For the Indonesian stock market, pressure emerges from two directions. Firstly, there is potential for foreign capital outflow as international investors reduce their exposure to emerging markets. Secondly, there is the risk of import-driven inflation from surging energy costs, which could elevate production expenses for domestic listed companies.
The Composite Index faces resistance at approximately 8,300, with the psychological support level of 8,000 serving as the next critical zone if this level is breached.
Despite the mounting headwinds, not all sectors face negative impacts. Commodity-based sectors have emerged as potential index supports. Rising gold and oil prices present opportunities for mining and energy stocks.
Market analysts have recommended trading positions in several energy and mining stocks. PT Merdeka Copper Gold Tbk (MDKA) is rated as a trading buy with a target of IDR 3,900, whilst PT Aneka Tambang Tbk (ANTM) carries a target of IDR 4,500. PT Elnusa Tbk (ELSA) is viewed as attractive for trading buy positions at a target of IDR 900, PT Energi Mega Persada Tbk (ENRG) at IDR 1,900, and PT AKR Corporindo Tbk (AKRA) as a speculative buy at IDR 1,400.
Additionally, PT Soechi Lines Tbk (SOCI) merits consideration as a trading buy at IDR 750, given rising shipping activity and tariffs for energy transport amid global crude oil price volatility.