Economist: Indonesia's Stock Market Weakness Driven by Fundamentals, Not Politics

The recent decline in Indonesia's Composite Stock Price Index (IHSG) is primarily influenced by fundamental economic factors rather than political narratives, according to economist Surya Vandiantara. He contends that the common association of the IHSG's weakening with presidential speeches is inaccurate.

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If the performance of companies listed on the exchange, by majority, experiences a decline in revenue or losses, it is only natural for the IHSG value to also fall.

Vandiantara, an economist at Bengkulu Muhammadiyah University, explained that theoretically, the IHSG's movement is more closely tied to the fundamental performance of listed companies. "If the performance of companies listed on the exchange, by majority, experiences a decline in revenue or losses, it is only natural for the IHSG value to also fall," he stated.

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This narrative indicates the presence of unruly investors engaging in irrational behavior on the exchange, causing the IHSG value to decline. The drop in the IHSG is then linked to political agendas discrediting the President.

However, Vandiantara noted an anomaly, observing that while the performance of most companies and macroeconomic indicators appear stable and positive, the IHSG has still weakened. He pointed to the emergence of narratives linking the IHSG's drop to presidential speeches, suggesting this indicates other factors at play, possibly "unruly investors" engaging in irrational behavior.

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For the sake of achieving a hidden dirty political agenda, they have harmed many parties.

This irrational behavior, he warned, could disrupt the healthy market mechanism, harming both diligent investors and listed companies. Vandiantara urged the public not to be easily swayed by prevailing narratives and called on the government to take decisive action against investors whose actions are deemed detrimental to market integrity and driven by hidden political agendas.

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The government must be brave enough to take firm action against irrational behavior by unruly investors with political agendas, in order to protect the wider community.