The Jakarta Composite Index (JCI), the main gauge of the Indonesia Stock Exchange (IDX) fell sharply in Tuesday’s trading as protests against the government and the House of Representatives’ policy to amend several crucial laws spread across the archipelago.
The index dropped 1.11 percent to 6,137 by the closing bell with foreign investors dumping Rp 773.2 billion (US$54.8 million) worth of shares on the day. However, investors have still booked net buys of Rp 52.93 trillion so far this year.
“The protests will affect the JCI’s performance more or less because they indicate our political situation is getting hotter,” said Pilarmas Investindo Sekuritas research director Maximilianus Nico Demus. He, however, added that external sentiment also outweighed domestic factors.
“We see that investors tend to focus on global developments, particularly the United States and China, rather than the Corruption Eradication Commission [KPK] Law issue,” said Maximilianus, referring to the world’s two largest economies that have been embroiled in a trade spat.
Thousands of university students from across Indonesia took to the streets in a continuation of a series of protests against what they perceive to be attempts by the government and the legislature to roll back democracy. They are demanding the government revoke the recently passed KPK Law and are protesting against problematic articles in at least five bills, including the Criminal Code bill, manpower bill, land bill, mining bill and correctional procedures bill.
“Investors will continue to take a wait and see approach until Jokowi announces his new Cabinet,” said Mirae Asset Sekuritas head of research Taye Shim.
President Joko “Jokowi” Widodo will be sworn in next month for his second term and is expected to name his Cabinet around that time.
On Tuesday, big cap stocks weighed on the JCI. Shares of private lender PT Bank Central Asia (BCA), state-owned bank PT Bank Rakyat Indonesia (BRI) and diversified conglomerate PT Astra International were the three laggards of the index.
“The JCI is still under selling pressure […] Several stocks in the consumer, miscellaneous and banking sectors have been pressing on the index in the last week,” Maximilianus said.
