Second Trading Halt This Year

As we return to our routines after the long Hari Raya Lebaran holidays, we hope you had a well-deserved break. The Indonesian stock market (JCI) reopened today with a sharp correction of 9%, triggering a 30-minute trading halt — the second halt this year. Interestingly, this circuit breaker was activated at 9%, rather than the usual 5%, which we believe was a pre-emptive measure by regulators in anticipation of heightened volatility.

What Triggered This Market Meltdown?

In our previous capital call on 24 March 2025 — we highlighted the potential downside risk from Trump’s proposed reciprocal tariff policy. That risk has now materialized. On 2 April 2025 — dubbed “Liberation Day” — former President Trump announced a new round of tariffs, with Indonesia among the targeted countries. The announcement coincided with the Lebaran holidays, leaving the market with little to no time to react until trading resumed.

In the past three days, the most severe equity sell-offs have been concentrated in economies highly exposed to global trade such as Hong Kong, Japan, Singapore, and Taiwan. In contrast, more domestically driven emerging markets like India and Malaysia outperformed, with declines of less than 8%. Meanwhile, the Indonesian Rupiah (IDR) has weakened significantly — down 11% over the past six months — almost breaching 17,000 per U.S. Dollar.

We view Trump’s strategy of implementing these reciprocal tariffs as a means to pressure countries into negotiations, encouraging them to remove tariffs on U.S. goods and services. Adding to the uncertainty, Fed Chair Jerome Powell noted that these tariffs could be reflationary and potentially slow down growth, pushing back expectations of a rate cut this year.

How are we Responding?

At times like this, market chatter and noise sound louder. However, we stuck with our strategy. We anticipated heightened volatility by taking proactive steps before the holidays by trimming some of our equity positions and increasing our cash buffer. This strategic de-risking positioned us well to take advantage of opportunities during a sell-off like today.

Our equity portfolio remains focused on fundamentally strong domestic-focused businesses armed with minimal exposure to U.S. exports. In fact, several of our holdings may benefit from a stronger USD, which could boost their earnings and, in turn, their stock prices.

For Investors - Fasten your seatbelts, but stay calm.

We understand that, as investors, you may feel confused when faced with market uncertainties, volatile market conditions and rapid policy changes. This is completely valid and we feel that too — the current environment is complex, dynamic, and emotionally taxing for anyone.

Volatility is an inevitable part of investing, especially in moments like this. While it can be overwhelming, we encourage you to stay calm, stay disciplined, and focus on your long-term objectives. We always believe at times like these is the best time to start or continue building your wealth.

Our recommendation: Hold additional cash to adopt a Dollar-Cost Averaging (DCA) approach to take advantage of attractive entry points during corrections. However, please be mindful that staying invested in this market carries inherent risks. As always, we are closely monitoring developments and stand ready to adjust our strategy accordingly. Do not fret, we are here to guide and assist you achieve your financial goals.

Thank you.