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s global markets plunged following a sell-off on Wall Street with the hope of a rising United States interest rate, the sentiment also hit the Indonesia Stock Market (IDX) with the composite index down at closing on Friday — albeit slightly.

The dramatic fall started on Monday in the US, following a sell-off last Friday. European markets collapsed on Tuesday, while Tokyo stocks fell almost 7 percent before closing at 4.7 percent. On Friday, however, the IDX demonstrated higher resilience compared to other markets in the region. The Jakarta Composite Index (JCI), the IDX’s main gauge, was down 0.6 percent to 6,505.52.

Meanwhile, the Strait Times Index in Singapore, the Hang Seng Index in Hong Kong and the Shanghai Composite Index in China were down by 4.32, 9.49 and 9.60 percent, respectively.

Analysts said the IDX’s resilience was supported by domestic investors who are less affected by global issues.

“The domestic investors, especially insurance companies and pension funds, are playing bigger roles in our market. In 2017, the equity investment by these institutions increased by 20.50 percent year-on-year or by
Rp 42.3 trillion to Rp 248.6 trillion,” Mirae Asset Sekuritas Indonesia analyst Darmawan Halim said on Friday in his research note.

He added that a higher contribution from domestic investors helped the JCI reduce its volatility over global turmoil.

According to IDX data, domestic investors made a Rp 5.4 trillion net buy in a week, which overcame the Rp 5.3 trillion net sell-off by foreign investors.

Indonesian Central Securities Depository president director Frederica “Kiki” Widyasari Dewi said the transactions from domestic investors were currently on par with foreign investors.

Darmawan said due to such high volatility, the right strategy was to be selective and buy on weakness, especially as the JCI had increased quickly in recent months, which reduced the expected return.

“In this situation we prefer sectors that are lagging in price growth compared to other sectors such as retail, media, metal and telecommunications,” he added.

Bank Indonesia (BI) Governor Agus Martowardojo said the situation in the US would limit the central bank’s ability to further cut its reference rate, the BI 7-Days Reverse Repo Rate. Despite the pressure, Agus signaled that the central bank would hold the rate as long as possible.

“Currently, our stance is neutral but we will pay attention to global market updates,” he said.

Since January 2016, the central bank has actively cut its reference rate by 200 basis points (bps) to 4.25 percent.

However, in the same period the banks’ average loan rate was only reduced by 153 bps to 11.30 percent, BI senior deputy governor Mirza Adityaswara said.

The global market swing began when US payrolls data caused fears that inflation will increase this year and that the Federal Reserve will have to raise the interest rate more quickly than
anticipated.

Some Federal Reserve board members, such as San Francisco Federal Reserve Bank president John Williams and Dallas Federal Reserve Bank president Robert Kaplan, said there might be a chance that the interest rate would increase four times this year.

On Monday, the Dow Jones Industrial Average (DJIA) fell by 4.37 percent, the biggest since 2011. Investors are selling their stocks due to fears that the increase in inflation and wages will disturb corporates’ profitability as they have to a pay bigger cost of employment and debt.

In the latest trade on Thursday, the DJIA closed at 23,860.46, a decrease of 5.83 percent compared to 25,337.87 at the opening of Monday trading.

On Friday, the US House of Representatives approved the budget bill that will increase goverment spending by US$300 billion as well as raising the debt limit to around $22 trillion compared to $20.46 trillion of today.