The behavioral biases include confirmation bias, where people only want to hear things that align with their predisposed outlook and ignore those that are not, according to Budi Frensidy, a stock market expert from the Faculty of Economics and Business at the University of Indonesia.

Another type of bias is availability bias, which refers to the tendency of people taking action based on familiar information, without further investigation.

“Retail investors run into behavioral bias, something that institutional investors do not experience, as institutional investors have to refer to a set of guidelines or strict rules,” Budi said during a webinar on Tuesday, saying that, for example, institutional investors had to keep their losses within a predetermined percentage range.

Retail investors, on the other hand, are more flexible in their investing, and their asset allocation is determined by more varied factors, including their age, in comparison to institutional investors whose asset allocation is solely determined by their ability to take risks, Budi explained.

During the pandemic, the local bourse saw a significant increase in domestic retail investors' participation, while foreign investors sustained selling pressure on the market. The number of retail investors at Indonesia Stock Exchange (IDX) has reached over 1.2 million, growing by 12.17 percent as of June 30 from December last year, according to data shared by Budi.

According to IDX data, the bourse on Tuesday comprised of 62 percent domestic investors and 38 percent foreign investors. At the end of last year, the shares of domestic and foreign investors were 55.71 percent and 44.29 percent, respectively.

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