Rupiah and MSCI Rebalancing Become Sentiments for IHSG, Retail Investors Can Follow These Analyst Stock Recommendations
JAKARTA, KOMPAS.com - The Composite Stock Price Index (IHSG) today, Wednesday (13/5/2025), is receiving sentiments from the Morgan Stanley Capital International (MSCI) global index rebalancing and the rupiah exchange rate that continues to weaken against the US dollar.
Technical analyst at MNC Sekuritas, Herditya Wicaksana, said that market participants are still monitoring the release of US inflation data, which has the potential to influence the direction of Federal Reserve (The Fed) interest rate policies.
In addition, the MSCI evaluation results are expected to affect foreign fund flows in the domestic stock market.
Herditya also estimated the IHSG support level at 6,815 and resistance at 6,870.
Meanwhile, Investment Specialist at PT Korea Investment and Sekuritas Indonesia (KISI), Ahmad Faris Mu’tashim, stated that the banking sector tends to respond negatively when the rupiah weakens.
This is because the widening exchange rate spread can encourage foreign institutions to adjust their portfolios or rebalance. This condition occurs because banking stocks have a significant foreign ownership weight, so when exchange rate risk increases, foreign investors tend to reduce exposure in that sector.
Foreign selling pressure could also make banking stock movements more volatile.
“Banking tends to respond negatively because the exchange rate spread will force rebalancing for foreign institutions that have a large weighting in banking stocks,” Faris emphasised to Kompas.com.
On the other hand, besides the energy sector, the pulp sector is considered one of the attractive sectors amid the rupiah’s weakening. This is because the majority of pulp companies’ revenues are obtained in US dollars, so the rupiah’s depreciation can increase revenue value when converted to rupiah and potentially support the companies’ financial performance.
“Besides the energy sector, the pulp sector is also one of those that is attractive because company revenues are in US dollars,” he continued.
Pressure on the rupiah could also trigger panic selling in the capital market, especially when foreign investors start to worry about exchange rate stability and domestic economic risks. However, the current situation is not necessarily as severe as previous financial crises because the fundamentals of Indonesia’s banking sector are relatively stronger compared to previous crisis periods.
Faris assessed that the pressure in the stock market is starting to show more limited downside if looking at the IHSG’s technical movements. According to him, the index area around 6,800-6,900 is a level that is quite difficult to break below.
“If viewed from price action, the 6,800-6,900 area is hard to break, meaning the downside is starting to be limited. A sell shock may occur during the anticipated MSCI rebalancing that market participants are waiting for, but after that, there will be a price reversal,” he said.