Weekly Market Recap: Indonesia Stock Market Plunges Amid New FCA Policy

The market capitalization of the Indonesian Stock Exchange (IDX) plummeted by 4.35 percent this week, closing at Rp 11,825 trillion ($729.94 billion) compared to Rp 12,363 trillion at the end of the previous week.

The Jakarta Composite Index (IHSG) saw a significant correction of 3.48 percent, dropping to 6,970.736 from 7,222.382 during the period of May 27 to 31, 2024.

The introduction of the Full Call Auction (FCA) on the IDX has been a major factor in the index's fall below the 7000 level. Barito Renewables Energy (BREN), which boasts the largest market capitalization, was severely impacted by the FCA.

"The inclusion of BREN shares in the special monitoring board has caused our index to drop by more than 1 percent in recent days," said Budi Frensidy, Market Analyst and Professor at the Faculty of Economics and Business, University of Indonesia.

The IDX began implementing the second phase of its FCA policy on March 25, aiming to enhance investor protection. However, the policy has been perceived as destabilizing, leading to significant declines in the stock market index.

The enforcement of the FCA measure on BREN's stock drew strong reactions from investors, especially since it came shortly after the company's inclusion in the Financial Times Stock Exchange (FTSE) Global Equity Index under the large-cap category, effective June 2024.

Trading of BREN stock resumed on Wednesday after a two-day suspension. On the same day, BREN was placed on the IDX’s special monitoring board, where the FCA policy requires periodic auctions in five sessions daily for 30 days.

BREN has dropped nearly 30 percent over the past three days, with shares falling 10 percent on Wednesday, dropping 9.8 percent on Thursday, and weakening by 9.8 percent on Friday.

Meanwhile, the average daily transaction value rose by 49.01 percent to Rp 18.12 trillion from Rp 12.16 trillion the previous week. Additionally, the daily transaction volume increased by 34.47 percent to 20.729 billion shares from 15.415 billion shares.

Foreign investors on Friday recorded a net sell value of Rp 66.58 billion.

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