OJK Reveals Causes Behind IHSG Crash

The Financial Services Authority (OJK) has acknowledged that domestic sentiment has also influenced the Indonesian capital market, which remains slumped in the red zone. This was reflected in the Composite Stock Price Index (IHSG), which plunged more than 4% today. OJK’s Chief Executive of Capital Market, Derivative Finance, and Carbon Exchange Supervision, Hasan Fawzi, stated that the authority understands the various views that have emerged recently regarding the factors affecting market movements and resulting in significant pressure on the stock market. The OJK said this reflects a market response that has accounted for a combination of factors, both domestic and global. Beyond the MSCI rebalancing issue, domestic and global economic factors have also entered investors’ calculations. “However, there are also developments in various economic indicators and sentiments, both domestic and global, which have also influenced and become part of what investors are accounting for,” he said during a virtual press conference on Friday. The OJK continues to urge and remind investors to follow and observe market dynamics objectively, proportionally, and rationally by prioritising adequate analysis and utilising valid, confirmed information. “This is important so that every investment decision can be made in accordance with the results of such analysis amidst highly volatile market conditions with current dynamics and pressures,” he stated. Amid the stock market’s dynamics and pressures, the OJK conveyed that fundamentally, the Indonesian capital market and the performance of issuers in general remain solid. This is reflected by the still-high transaction values and liquidity in the domestic stock market. Additionally, based on the latest issuers’ financial reports for the first quarter, the aggregate figures still recorded positive growth. “Of course, these are historical figures, and the majority of listed companies still booked profits with aggregate profit growth of more than 21% compared to the same period in the previous year’s first quarter,” he revealed. To maintain stability in the capital market industry, the OJK has issued a number of policies responsive to market conditions, including providing flexibility for issuers to conduct share buybacks without requiring General Meeting of Shareholders (RUPS) approval. It is also closely monitoring market developments and pressures, adjusting trading halt parameters and lower auto-rejection limits. Furthermore, it has postponed the implementation of and prohibited short selling practices under current conditions. “All while continuing to consider market readiness conditions and aspects of investor protection,” he concluded.