Danantara's Boss: Short-Term Volatility is Normal, Market Still Shows Positive Signals

JAKARTA - Danantara Indonesia assesses that the market turmoil that occurred after the announcement last weekend is part of a normal adjustment process.

In the midst of a short-term correction, the market is still showing positive signals, reflected by the entry of foreign investor funds and increased interest in stocks with strong fundamentals.

Danantara Indonesia's Chief Investment Officer (CIO) Pandu Sjahrir said that market dynamics need to be observed in a complete and proportional manner.

According to Pandu, the correction that occurred mainly targeted stocks with valuations that had previously soared.

"Despite short-term adjustments, including corrections in stocks with previously very high valuations, the market also shows constructive signals," Pandu said in a statement, in Jakarta, Monday, February 2.

Pandu said that on the first day of trading, there was still a flow of foreign funds entering (net foreign buy) of IDR 654.9 billion. In addition, investor interest began to shift to stocks with good fundamentals and liquidity.

According to Pandu, this movement is part of a healthy adjustment process.

He emphasized that market pressure not only occurred in Indonesia, but was also felt regionally in Asia to the global community.

"In the midst of this condition, the market is rebalancing portfolios, with investors beginning to re-evaluate fundamental, valuation, and business quality-based investments," he said.

Pandu assessed that assets that are still in demand by investors generally have strong fundamental characteristics, adequate liquidity, attractive valuations, and healthy cash flows. This dynamics is reflected in the movement of leading stocks, both those recording strengthening and corrections.

He emphasized that short-term volatility should not be over-reacted to. The reason is that investing in the capital market is basically a medium to long-term decision.

"Therefore, short-term volatility does not need to be over-reacted to. Assets with solid fundamentals still have strong appeal," said Pandu.

As a market player, Danantara Indonesia also remains active in investing with a focus on companies that have attractive valuations, strong cash flows, healthy fundamentals, and adequate liquidity.

Pandu emphasized Danantara's confidence in Indonesia's economic prospects and the attractiveness of domestic assets.

On the other hand, Danantara also encourages the acceleration of strengthening the market structure together with stakeholders. These efforts are focused on increasing information openness and strengthening governance to deepen the market and maintain investor confidence, both domestic and global.

"We support the deepening of technical and detailed implementation so that market reforms can be measured and sustainable," he said.

Pandu also appreciated the quick response of regulators and market organizers after the announcement last week.

According to him, this step is a positive signal for market stability in the future.

In line with this, said Pandu, Danantara Indonesia has held discussions with Morgan Stanley Capital International (MSCI) and will continue to coordinate with MSCI, Self-Regulatory Organization (SRO), and the Financial Services Authority (OJK) to support the sustainable strengthening of the Indonesian capital market.