The Jakarta Composite Index (JCI), the benchmark for the Indonesia Stock Exchange (IDX), experienced a significant downturn on Friday, plummeting by 204.9 points, or 2.86 percent, to close at 6,969.40. This substantial decline marked a challenging end to the trading week for investors, reflecting a broader sense of market caution.
Herditya Wicaksana, an analyst at MNC Sekuritas, attributed the JCI’s correction to a confluence of factors, primarily aligning with the general weakening observed across most global markets. He highlighted that external sentiment and increasing pressure on mining stocks were key drivers behind this market fragility. “This trend mirrors the corrections seen in the majority of global and regional Asian exchanges, largely stemming from the unresolved negotiations between the United States and Iran,” Wicaksana explained in Jakarta on Friday. He further noted that the continued weakening of the Indonesian rupiah against the US dollar also contributed to the downward trajectory.
From a technical standpoint, Herditya suggested that the JCI still holds the potential for further declines, signaling a cautious outlook for the immediate future. Beyond these international influences, a substantial portion of the pressure on the Indonesian stock market originated domestically, specifically impacting metal mining issuers. This was triggered by the government’s recent proposal to significantly increase mineral and coal (minerba) royalties, a strategic move aimed at boosting state revenue.
The Ministry of Energy and Mineral Resources (ESDM) has put forward a new progressive royalty scheme, designed to optimize government earnings from several key mineral commodities. Herditya elaborated on the details of this initiative, stating, “This comprehensive scheme involves raising the upper limits for royalties and implementing adjustments to price ranges. The goal is to maximize state revenue, particularly when commodity prices are on an upward trajectory.”
Under the proposed revisions, the royalty rate for copper concentrate is set to increase from a previous flat rate of 7-10 percent to a new range of 9-13 percent. Similarly, copper cathode royalties would see a rise from 4-7 percent to 7-10 percent. Gold royalties are also slated for a substantial hike, moving from 7-16 percent to 14-20 percent, accompanied by an additional new price bracket for gold exceeding US$5,000 per ounce. Furthermore, silver royalties, previously a flat 5 percent, are proposed to become progressive, ranging from 5-8 percent, while tin royalties would shift from 3-10 percent to a progressive 5-20 percent. For nickel ore, the royalty tariff will remain within the 14-19 percent range, but adjusted price intervals mean that rate increases could potentially be triggered more rapidly.
This palpable market sentiment was vividly reflected in the performance of various sectors. The Raw Materials sector (IDXBASIC) bore the brunt of the selling pressure, plunging by a remarkable 7.80 percent. The Energy sector (IDXENERGY) followed, experiencing a substantial drop of 4.59 percent, while the Transportation sector (IDXTRANS) also weakened significantly by 5.72 percent, indicating broad-based market apprehension.
Throughout the trading session, market activity showed a clear imbalance: 138 stocks managed to strengthen, a stark contrast to the 607 stocks that weakened, and 214 stocks that remained stagnant. The overall market capitalization of the Indonesia Stock Exchange stood at Rp12,405 trillion. Trading volume was robust, with 54.39 billion shares changing hands across 2.8 million transactions, culminating in a total transaction value of Rp36.07 trillion.
Markets Monitor Global Monetary Direction, JCI Expected to Move Sideways This Week
Summary
The Jakarta Composite Index (JCI) dropped by 2.86 percent to close at 6,969.40, driven by global market instability and the weakening Indonesian rupiah. Analysts noted that geopolitical tensions between the United States and Iran, alongside broader regional corrections, significantly impacted investor sentiment. Domestically, the market faced further pressure due to the government’s proposal to increase progressive royalty rates for mineral and coal mining companies.
The proposed royalty hikes specifically target commodities like copper, gold, tin, and silver, causing a sharp decline in the raw materials and energy sectors. Market performance reflected this volatility, with 607 stocks weakening compared to only 138 gainers. Consequently, the Indonesia Stock Exchange saw broad-based selling pressure as investors reacted to both domestic policy shifts and international economic uncertainty.