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JCI under pressure amid forced selling, economic uncertainty
The Indonesia Stock Exchange’s (IDX) main gauge fell by 2.04 percent not long after the market’s opening on Monday, before rebounding and increasing by 2.75 percent.
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The Indonesia Stock Exchange (IDX) logo is seen in front of a giant screen that displays the movement of stock prices in Jakarta on March 13, 2020. (JP/Seto Wardhana)
T
he Jakarta Composite Index (JCI) is expected to remain volatile this week, following a wave of forced stock selling and lingering global uncertainty related to COVID-19 that led to a five-day decline streak last week.
The Indonesia Stock Exchange’s (IDX) main gauge fell by 2.04 percent not long after the market’s opening on Monday, before rebounding and increasing by 3.5 percent to 6,067.54 at Tuesday closing. It has lost 3.05 percent of its value in a week, according to IDX data.
Analysts attributed the JCI’s 7 percent decline last week to securities firms force-selling stocks, as some new investors struggled to pay back the firms after suffering losses on their shares. The trend piled added to existing pressure from uncertainties related to COVID-19.
“Securities force sold stocks, which pressured the JCI. This led to several listed companies hitting their lower auto-reject limits [ARB] and it also affected some blue-chip companies,” MNC Sekuritas analyst Rudi Suthong told The Jakarta Post on Friday, referring to an IDX policy to halt trading for stocks that have fallen 7 percent.
Telecommunications giant PT Telekomunikasi Indonesia (TLKM), consumer goods giant PT Unilever Indonesia (UNVR) and state-owned Bank Rakyat Indonesia (BRI) were among the blue-chip companies leading the JCI’s plunge last Friday.
He predicted that the JCI’s performance would likely remain strained this week as investors wait for the listed companies to release their full-year financial reports and as securities end their force sell transactions.
Binaartha Parama Sekuritas equity analyst Nafan Aji said the JCI was also being pressured by the United States Federal Reserves’ dovish monetary policy to keep its interest rate low, rising US-China tensions over the South China Sea and the US’ lower-than-expected economic growth for the fourth quarter of 2020, all of which were events that unfolded last week.
