Jakarta, CNBC Indonesia – Market players are again amazed by the behavior of foreign investors on the Indonesia Stock Exchange (IDX) in this week’s trading, because this week’s foreign trade returns run away from the Indonesian stock market. This week, foreigners fled with a sizable amount of Rp. 2.17 trillion in the regular market alone.
The fading of foreigners in the local capital market continues the selling trend of foreign investors, although in fact the flight of foreigners this week is not as bad as several weeks ago where foreigners had fled more than Rp 4.5 trillion in a week.
Even according to statistics released by the IDX on a weekly basis foreigners have fled for 16 consecutive weeks. The last time foreigners entered the Indonesian stock market was 4 months ago during the first trading week in June. At that time foreigners recorded net buy on a weekly basis amounting to Rp. 3.3 trillion.
The continued absence of foreign investors is certainly a worrying thing because foreign investors hold 49.95% of scripless shares, aka scripless, circulating on the IDX, according to KSEI records as of August 2020.
For information, stock scripless is listed shares of conversion ke in digital electronic form. The rest, there are still shares in scrip form thatusually held by controllers companyn recorded.
If foreign sales continue and there are no ‘money-making’ local investors who can afford foreign goods, then the chances of IHSG being stressed into the red zone will be higher.
The loss of foreign funds is indeed very worrying because if it is withdrawn until a period of 3 months, foreign selling on the IDX reaches Rp. 28.39 trillion and an unbelievably large number will appear if foreign selling is calculated since the beginning of the year (YTD). During the current year, foreigners have recorded Rp. 58.42 trillion in funds in the regular market, a very large nominal.
The strong purchasing power of local investors in accommodating foreign goods sold without causing a severe fall in the JCI itself is attributed to the successful increase in the number of retail investors which yearly already increased 22% from last year to 3 million investors as of August 2020.
Of course, the question will arise in the minds of all market players as to what caused foreign investors to run away their funds from this market that is proud of Garuda.
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Well, maybe one of the reasons is that the handling of corona in Indonesia has not yet found common ground. Reporting from Refinitiv can be seen from the chart above. Indonesia has even just recorded a record for the addition of daily corona cases for three consecutive days and the addition of daily cases is still increasing and not sloping, let alone down.
Of course, with the protracted corona virus pandemic in Indonesia, the economy will be hampered or could even stop altogether if the super strict PSBB is re-enforced.
If the wheels of the economy are hit, of course, the one that will suffer the most is the stock market, because of course the majority of companies’ revenue will be cut due to limited operations.
This suddenly made foreign investors hesitant to enter the domestic stock market and chose to run their funds first because it was clear when the wheels of the economy in Indonesia would return to normal.
Indeed, many predict that life will return to normal when a vaccine has been found, but after the discovery of a vaccine, of course there is still a stage of mass vaccine production and mass distribution not only in Indonesia but throughout the world.
Because of this, according to the document of the Coordinating Ministry for Economic Affairs which is spread, economic recovery will return to the level before the corona virus pandemic will only occur in 2022 or 2023. It is this long normal condition of the Indonesian economy that is likely to make foreigners run away continuously.
In the end, no one really knows why investors keep running away at the local stock exchange, because of course the views of each foreign investor are certainly different and not the same, but one thing that foreigners agree on is, now it’s better to get out of the Indonesian stock market first. .
CNBC INDONESIA RESEARCH TEAM
(trp/trp)
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