Indonesian Stocks Plunge as Geopolitical Tensions and Credit Outlook Weigh on Market

Jakarta, Indonesia – Wednesday, March 4, 2026 – Indonesian stocks experienced a significant downturn today, with the Jakarta Composite Index (IHSG) closing at 7,577.06, a 4.57% decrease. The decline was driven by a combination of escalating geopolitical conflicts in the Middle East and a negative revision of Indonesia’s sovereign credit outlook.

Market Overview

The IHSG fell to 7,577.06, down 362.70 points from its opening level of 7,896.37. Only 54 out of 910 stocks closed in positive territory. Leading the decline were shares of Amman Mineral Internasional (AMMN), down 10.62% to Rp6,100, Chandra Asri Pacific (TPIA), down 8.15% to Rp5,350 and Telkom Indonesia (TLKM), down 7.25% to Rp3,200. Unilever Indonesia (UNVR) also contributed to the downward pressure, falling 6.97% to Rp1,935 per share.

Geopolitical Concerns Fuel Market Sell-Off

The primary catalyst for the market’s decline was increasing tensions in the Middle East. Escalating conflicts have raised concerns about potential disruptions to global energy supplies and increased risk aversion among investors. Similar declines were observed across Asian markets, including South Korea’s Kospi index, Thailand’s SET index, and Japan’s Nikkei 225. The situation is causing a flight to safety, with investors reducing exposure to riskier assets.

Fitch Downgrades Indonesia’s Credit Outlook

Adding to the negative sentiment, Fitch Ratings revised Indonesia’s sovereign credit outlook to “negative” from “stable” today. This follows a similar move by Moody’s in early February 2026. While maintaining Indonesia’s rating at BBB level, Fitch cited increasing policy uncertainty and concerns about the consistency of Indonesia’s policy mix as reasons for the downgrade. The agency warned that these factors could weaken the medium-term fiscal outlook and put pressure on external buffers.

Economic Impact and Government Response

The decline in the IHSG and the negative credit outlook raise concerns about the potential impact on Indonesia’s economy. Rising oil prices, driven by geopolitical tensions, could exacerbate inflationary pressures and strain the country’s fiscal position. Indonesia is a net importer of oil.

Finance Minister Purbaya Yudhi Sadewa stated that the government is prepared to adjust the spending budget to maintain the fiscal deficit below 3% of GDP. Potential measures include cuts to programs like the Free Nutritious Meals program.

Sector and Stock Highlights

• Top Gainers: Ifishdeco (IFSH) rose 25% to Rp3,250, and Satria Mega Kencana (SOTS) gained 24.59% to Rp725.
• Top Losers: Island Concepts Indonesia (ICON) fell 14.91% to Rp97, and Megapower Makmur (MPOW) declined 14.73% to Rp110.
• Medco Energi (MEDC): The company anticipates a 2.7% year-over-year increase in total oil and gas production in 2025, reaching 156 MBOEPD.
• Indo Tambangraya Megah (ITMG): The company is targeting coal sales of 6.8 million tons in the first quarter of 2026.
• Bank Negara Indonesia (BNI): The bank is proceeding with a share buyback plan, with a revised allocation of approximately Rp905.5 billion.

Foreign Flow and Rupiah Exchange Rate

Today’s trading session saw a net foreign outflow of IDR 117.9 billion. The rupiah exchange rate depreciated by 0.17% against the US dollar, reaching 16,885. The yield on 10-year government bonds increased by 6.9 basis points to 6.61%.

Looking Ahead

The potential for de-escalation of geopolitical tensions remains a key factor in reversing the current negative sentiment. Investors will closely monitor developments in the Middle East and assess their impact on global energy markets and economic growth. The government’s ability to manage the fiscal deficit and maintain investor confidence will also be crucial in stabilizing the Indonesian stock market.