JAKARTA - The movement of the Composite Stock Price Index (JCI) corrected again in yesterday's trading, Thursday, May 12. The JCI plunged to a level of 6.599.84, weakening by 9.09 percent in less than a week.
In yesterday's trading, the JCI moved in the range of 6.576-6.802. A total of 97 stocks rose, 480 stocks weakened, and 112 stocks were stagnant. Foreigners recorded a net sell-off in a day worth IDR 712.3 billion.
The decline in the JCI followed the poor performance of most regional stock markets in Asia Pacific. The poor performance, according to analysts, was the impact of rising inflation data in the United States which had previously also knocked down Wall Street in recent times.
"The JCI closed significantly lower in response to several US economic data which showed unfavorable results and further raised concerns about worse inflation," said Artha Sekuritas analyst, Dennies Christopher Jordan in his research.
Over the past month, the US consumer price index increased 8.3 percent compared to the same period last year. The inflation rate is near the highest level since the last 40 years.
The inflation data that exceeded expectations increased market participants' confidence that the Fed would again respond by raising interest rates. This means that the trend of net foreign selling in the stock market will continue.
The problem is, the economic situation in Uncle Sam's country is not the only sentiment that puts pressure on the capital market. Russia-Ukraine tensions that do not subside, the potential for a pandemic from the emergence of a mysterious new hepatitis disease, as well as the upward trend in COVID-19 cases in a number of countries will continue to depress the movement of the index.
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This situation reinforces the theory of 'sell in may' which has an impact on the historically negative performance of the stock market. Moreover, many investors took profit taking this month considering the relatively encouraging performance of the securities portfolio throughout the current year.
The weakening of the index's performance in recent days has at least discounted the prices of a number of large-cap stocks. Investors need to take advantage of this momentum to buy back undervalued shares and focus on blue chip issuers.
When the index improves, blue chip stocks will print the fastest growth and lead the JCI rebound.
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