Observer: JCI declines as investors shift funds to safer assets

Capital market observer Elandry Pratama explained that the weakening of the Jakarta Composite Index (JCI) is caused by investors reducing their exposure to risky assets and shifting funds into safer assets. According to him, this stance is a response to a combination of domestic and global sentiments.

“The pressure is quite widespread, particularly on large-cap stocks that hold a dominant weight in the index, meaning the decline has had a significant impact on the JCI,” Elandly stated when contacted in Jakarta on Wednesday.

Domestically, Elandry explained that the weakening of the Rupiah, which is approaching the level of Rp18,000 per US dollar, is also weighing on stock market sentiment by increasing concerns regarding macroeconomic stability and the potential for capital outflow. Additionally, technical pressure resulting from the breach of support levels has accelerated selling activity in the market.

Internationally, market participants are responding to increasing global economic uncertainty and a ‘risk-off’ sentiment that is driving the movement of funds into assets considered safer. He noted that foreign investors currently tend to be in a ‘wait and see’ mode, focusing primarily on the stability of the Rupiah exchange rate, the direction of global interest rates, and Indonesia’s economic growth prospects. As long as Rupiah volatility remains high, foreign fund flows are likely to remain cautious.

“However, so far, I see more short-term risk reduction rather than a change in the fundamental view of the Indonesian market as a whole,” said Elandry.

Regarding the future projection of the JCI, Elandry predicts that it may remain volatile in the short term due to global sentiment and Rupiah exchange rate movements. However, after a sufficiently deep correction, the opportunity for a technical rebound remains open if selling pressure eases and foreign fund flows show signs of stabilisation. He advised investors to focus on stocks with strong fundamentals and maintain risk management amidst market conditions that remain sensitive to external sentiments.

At the close of the first trading session on the Indonesia Stock Exchange (IDX) on Wednesday, the JCI was recorded to have weakened by 305.94 points, or 4.94 per cent, to the 5,889.48 level. The trading frequency was recorded at 1,798,806 transactions, with a total of 26.37 billion shares traded worth Rp14.89 trillion. During the session, 35 stocks increased, 714 stocks decreased, and 64 remained unchanged.