JAKARTA - The Financial Services Authority (OJK) acknowledges that foreign capital flows out or outflow still overshadows the Indonesian stock market. The pressure comes from a combination of global geopolitical uncertainty and the high interest rate policy of the US central bank that has not subsided.
OJK Chairperson Friderica Widyasari Dewi said the current market conditions cannot be separated from the global situation, especially the Fed's policy of maintaining high interest rates for longer or higher for longer.
"Indeed, at this time, the global geopolitical and geoeconomic factors, coupled with the Fed's higher for longer, are causing an outflow," said Friderica Widyasari or her colleagues, who are called Kiki, at the Presidential Palace Complex, Jakarta, Tuesday, May 5.
Even so, OJK assesses that the fundamentals of the Indonesian economy and financial markets are still strong enough to withstand short-term pressures.
According to Kiki, the movement of the Composite Stock Price Index (JCI) is now starting to move healthier and in line with major indices such as LQ45 and IDX30. He said that the current stock movement is starting to be supported by company fundamental factors, not just short-term sentiment.
OJK also highlighted the impact of the MSCI evaluation on the Indonesian capital market since the end of January. The evaluation had triggered global investors' attention to the transparency and liquidity of the domestic stock market.
To answer these concerns, OJK and market participants have begun to open 1 percent shareholder data, expanding the classification of investor data from nine to 39 categories, to open information on ultimate beneficial owners.
In addition, the provision of free float above 15 percent has also been implemented gradually to strengthen market liquidity.
Kiki said that the improvement measures did have a temporary impact on the market. However, OJK assessed that the pressure was a short-term consequence of the improvement of the capital market structure.
"This is a temporary impact of the improvements we are making," he said.
He added that market deepening continues to be strengthened through the increase in domestic investors. In the past year, the number of capital market investors has increased by about 5 million single investor identification (SID).
OJK hopes that strengthening domestic investors can make the Indonesian stock market more resistant to external turmoil.
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