Jakarta – The Indonesia Stock Exchange (IDX) Composite fell 0.08 percent on Wednesday to finish the trading day at 6,850.09.
The development came after Morgan Stanley downgraded Indonesia's stock market rating to underweight, a change expected to negatively affect the Composite index in the short term.
On the IDX, 141 stocks rose, 418 fell and 224 remained unchanged on Wednesday. The total trading volume was 19.52 billion shares with a total value of Rp 10.17 trillion (US$627.49 million).
The Composite index's decline caused only one sectoral index to stay in the green zone: the infrastructure sector, which rose by 0.21 percent.
Meanwhile, 10 other sectors fell into the red. The sectors with the deepest declines were the technology sector, down by 2.24 percent, the transportation sector, down 1.73 percent and the basic materials, which fell by 1.04 percent.
On the LQ45 index, the top gainers were PT Adaro Energy Indonesia (ADRO) with a rise of 2.57 percent, followed by PT Charoen Pokphand Indonesia (CPIN) with a gain of 1.47 percent and PT Telkom Indonesia (TLKM) with an increase of 1.39 percent.
On the other hand, the top losers were PT Semen Indonesia (SMGR) with a significant decline of 6.96 percent, followed by PT Indah Kiat Pulp & Paper (INKP) with a decrease of 5.57 percent and PT Pertamina Geothermal Energy (PGEO) with a loss of 4.70 percent.
According to Bloomberg, one reason for the rating downgrade was worries about the short-term fiscal policies under president-elect Prabowo Subianto and vice president-elect Gibran Rakabuming Raka.
Morgan Stanley said in a report that there was uncertainty about the future direction of Indonesia's fiscal policy. The company highlighted the potential increase in the state budget burden caused by programs such as the free lunch campaign.
In addition to fiscal policy, Morgan Stanley highlighted the Indonesian rupiah losing ground against the United States dollar. According to Bloomberg data, the rupiah's exchange rate weakened by 3.50 points (0.02 percent) to Rp 16,294 against the greenback.
"We see near-term uncertainty over the direction of future fiscal policy stance as well as some weakness in the FX market amid still high US rates and a firm US dollar outlook," Morgan Stanley strategists wrote, as quoted by Bloomberg.
Morgan Stanley's shift in stance on the Indonesian market began when the US dollar index strengthened ahead of the Federal Reserve and Bank Indonesia's interest rate announcements this month.