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🇮🇩 Indonesia /Economy & Trade

Indonesian Stocks Volatile Amid MSCI Rebalancing and EV Incentive Hopes

From Republika · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Indonesia's Composite Stock Price Index (IHSG) showed volatility, initially opening lower but recovering into positive territory.
  • The market is influenced by the MSCI index rebalancing and potential government incentives for electric vehicles using nickel-based batteries.
  • Global factors, including a potential US-Iran ceasefire extension and mixed performance in European and US stock markets, also impact trading.

Indonesia's Composite Stock Price Index (IHSG) experienced a volatile trading session, opening with a slight decline before rallying into positive territory. The market's movements are being closely watched as investors adjust portfolios following the MSCI index rebalancing, which took effect after Friday's closing bell.

Analysts predict continued fluctuations, with potential for significant portfolio adjustments by global investment managers tracking the MSCI index. This could lead to substantial selling pressure on stocks excluded from the index and contribute to overall market volatility. The Indonesian market is also anticipating government initiatives aimed at boosting the adoption of electric vehicles, particularly those utilizing nickel-based batteries.

For today's trading, the IHSG still has the potential to move fluctuatingly with a tendency towards volatility.

— Ratna LimHead of Research at Phintraco Sekuritas, commenting on the expected market movement.

Discussions are underway regarding a government incentive scheme, which may include a value-added tax (VAT) coverage ranging from 40% to 100%. Differentiated schemes are being considered for nickel and non-nickel battery vehicles, with nickel-based options potentially receiving greater support. This policy, though still under discussion and possibly delayed by a month, could positively impact companies involved in producing nickel-based electric vehicle batteries.

International market sentiment is also playing a role. Reports of a potential 60-day ceasefire extension between the United States and Iran have offered a temporary reprieve from Middle East geopolitical risks. While not yet finalized by U.S. President Donald Trump, the market has responded positively to these negotiation developments. Oil prices have shown varied movement with reduced volatility, reflecting expectations of stabilized global energy supply. Meanwhile, Asian regional markets displayed mixed performance on Friday morning, with Japan's Nikkei showing a significant gain.

So that it can cause massive sell-offs, especially on stocks that are removed from the MSCI index and trigger an increase in market volatility.

— Ratna LimPhintraco Sekuritas analyst explaining the impact of MSCI index rebalancing on market volatility.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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