Shocking Drop! IHSG Suddenly Plummets 2.5%, What Are the Causes?
The Jakarta Composite Index (IHSG) faced massive selling pressure during the second trading session today, Friday (8/5/2026). Right after 14:30 WIB until the close, the IHSG’s movement suddenly plunged sharply, recording a weakening of 2.44% at the level of 6,999.11.
This drastic decline was triggered by a combination of negative domestic sentiment related to discussions on mining sector regulations, coinciding with a correction trend in regional Asian stock exchanges.
War and Discussions on Mining Profit-Sharing Scheme
The main domestic catalyst that directly triggered capital outflows was the renewed tension in the war and the government’s plan to review the implementation of a profit-sharing system for the oil and gas sector (migas) to the mineral and coal mining (minerba) industry.
US and Iranian forces clashed in the Gulf region, while the United Arab Emirates (UAE) once again became a target of attacks, endangering the ceasefire that has been in place for a month and shaking hopes for a diplomatic solution to the crisis.
This increase in fighting occurred as Washington awaits a response from Tehran to its proposal to end the conflict, which began with joint US-Israel airstrikes in various Iranian regions on 28 February.
President Donald Trump stated on Thursday that three US Navy destroyers were attacked while crossing the strait, a route through which about one-fifth of the world’s oil and liquefied natural gas (LNG) flows, which Iran has almost completely closed since the conflict began.
“Three world-class American destroyers have just successfully crossed the Strait of Hormuz despite being under fire. There was no damage to any of the three destroyers, but the Iranian attackers suffered major damage,” Trump wrote on Truth Social.
Trump then told reporters that the ceasefire was still in effect and tried to downplay the incident.
“They tried to disturb us today. We destroyed them,” Trump said in Washington.
Iran’s supreme joint military command accused the US of violating the ceasefire by targeting an Iranian oil tanker and other vessels, as well as conducting airstrikes on civilian areas on Qeshm Island in the Strait of Hormuz and nearby coastal regions. Iran’s military said they responded by attacking US military ships east of the strait and south of Chabahar port.
Pressure also came from domestically, as the government considers options for implementing a cost recovery or gross split scheme with the aim of maximising the state’s share of revenue from natural resource management.
This news was immediately responded to defensively by market players. The characteristics of the mining industry are considered very different from the oil and gas sector, both in terms of the complexity of hundreds of types of permits and the diversity of commodity specifications.
Representatives of experts and associations, such as the Indonesian Mining & Energy Forum (IMEF) and the Indonesian Mining Experts Association (Perhapi), highlighted the need for in-depth study and caution so that this policy does not pressure the mining investment climate.
The mining industry is a capital-intensive sector with long-term horizons that heavily relies on legal certainty. The sudden discourse on overhauling royalty structures and financial obligations forces institutional investors to recalculate valuation models, cash flow projections, net profit margins, and potential dividend distributions from related issuers.
The lack of technical details from this discourse triggers regulatory uncertainty, so investors choose risk mitigation steps by selling large-cap stocks in the energy and mining sectors.
Asian Regional Exchange Pressure
The instant selling action in the domestic market was further accelerated by the risk-off sentiment currently sweeping Asian equity markets. Concerns about macroeconomic prospects are driving investors to withdraw liquidity and reduce exposure to risky assets in emerging countries.
The IHSG’s weakening aligns with the correction hitting all major indices in the region, although its correction was the worst compared to other Asian indices.
The combination of regional exchange weakening that pressures aggregate investment appetite, plus the emergence of domestic regulatory discourse that hits the fundamentals of the exchange’s supporting sectors, resulted in the IHSG unable to withstand the selling pressure and plunging sharply at the end of the trading session.