Dinda Shabrina, Jakarta – The Composite Stock Price Index (IHSG) tumbled over 4 percent on Tuesday, March 18, 2025, at 11:11 AM WIB, before plunging 5 percent, prompting the Indonesia Stock Exchange (IDX) to impose a temporary trading halt.
According to capital market analyst Kiwoom Sekuritas Oktavianus Audi, this sharp drop is an anomaly compared to other Asian markets, such as Nikkei (+1.4 percent), Shanghai (+0.09 percent), STI (+1 percent), and FKLCI (+1 percent). He believes this reflects growing investor concerns over Indonesia's economy and financial markets.
He stated that the rising risk premium for Indonesia is one of the factors weighing down the IHSG.
This is reflected in several indicators, including a slight increase in the Credit Default Swap (CDS) to 76 basis points as of February 27, 2025, a 0.6 percent depreciation of the rupiah from January to February 2025, and the widening spread between State Bonds (SBN) and the 10-year US Treasury (UST), which has now reached 255 basis points.
Furthermore, pressure also comes from the negative views of foreign investors towards the Indonesian market.
"Morgan Stanley and Goldman Sachs have downgraded their ratings for Indonesian stocks, citing several key concerns, including the widening budget deficit to 2.9 percent of GDP, fiscal risks from budget reallocations, the establishment of Danantara, the expansion of subsidized housing projects, and policy tariff tensions that could weaken the rupiah," said Audi when contacted on Tuesday, March 18, 2025.
He added that Goldman Sachs even predicts the rupiah will soon be the worst-performing currency in Asia.
Foreign selling pressure continues to rise. As of March 17, 2025, foreign investors had recorded an outflow of Rp26.9 trillion from the stock market.
"The last time we saw a significant decline like this leading to a trading halt was during the Covid-19 pandemic, precisely on March 19, 2020, when the IHSG dropped by 5.2 percent to the level of 4,105," said Audi.
If panic selling continues, he warns that the IHSG has the potential to break the psychological level of 6,000. "If this level breaks, the next support is at 5,900," he said.
Pressure is felt in almost all sectors, including the technology sector, which experienced profit-taking after a recent rally.
However, Audi believes that the financial sector still has the potential to be the main support for the IHSG. "If major banking stocks experience a technical rebound, pressure on the IHSG could slightly ease," he said.