Yesterday was another roller-coaster day for the Jakarta Composite Index (JCI), which plunged nearly 4.5%, briefly touching the 5,900 level before stabilizing around 6,100. We believe this rebound was supported by buybacks of shares permitted without shareholder approval. Had the index declined slightly more—reaching a 5% drop—it would have triggered the second trading halt of the year.

We attribute this market correction to ongoing global uncertainties, including the potential impact of Trump’s reciprocal tariff measures. Indonesia remains a possible target, with an announcement expected on April 2, 2025, coinciding with the Lebaran holidays. Additionally, domestic concerns persist regarding the feasibility of Indonesia’s Sovereign Wealth Fund and growing skepticism from global investors about Indonesia’s fiscal outlook and the viability of President Prabowo’s economic policies. The Rupiah also continues to hover around its new normal range of 16,400-16,500.

Indeed, it all comes down to fund flows in the market. While foreign investors own around 40% of Indonesian equities, their influence on market movements remains significant due to their active trading behavior and larger transaction volumes. Year-to-date, foreign investors have sold IDR 240 trillion worth of equities in the JCI, leading to a net sell position of IDR 31 trillion. As a result, domestic investors, who now make up 60% of the market, including us, have stepped in as the primary buyers, absorbing the selling pressure.

We understand that many of you have pressing questions about the market’s direction and how to navigate this volatility. Here are some key investor concerns and our responses:

Q: I was advised to top up when equities dropped last week. Now, with another correction, I’m being asked to top up again. How do I determine if this is truly a good time to enter, given the ongoing volatility in Indonesian stocks?

A: Market fluctuations are inevitable, and we recognize that continued calls to invest during downturns may raise concerns. However, we emphasize that the market is dynamic, influenced by multiple external factors. Since market timing is inherently uncertain, we recommend adopting a Dollar-Cost Averaging (DCA) strategy—investing gradually over time. This approach allows you to average out entry prices and maximize returns in the long run by capitalizing on market corrections.

Q: With markets being so volatile and heavily influenced by foreign flows, I’m becoming more pessimistic about the Indonesian capital markets. Should I continue investing regularly, or is it time to reconsider my strategy?

A: Your concerns are valid, and it’s natural to question your investment approach during periods of uncertainty. However, we believe Indonesia’s long-term fundamentals remain intact. What we are witnessing is a temporary crisis of confidence rather than a structural issue. Our confidence in Indonesia’s future is reflected in our stock selection and strategy. Staying invested with a disciplined, long-term perspective is key to weathering market cycles.

Q: How is Simpan responding differently compared to other fund managers in reaction to market events like this one?

A: During market corrections, we take a proactive approach to portfolio management. This involves continuous internal and external assessments, ensuring we make informed decisions in response to market conditions. We actively adjust our portfolio by adopting defensive or aggressive strategies based on economic trends, rather than passively riding out the volatility. Our approach ensures we are well-positioned for both short-term stability and long-term growth.

Q: If I can’t afford this level of drawdown from investing in equities, does it make sense to reallocate to other asset classes at this time?

A: Investment decisions should align with your risk tolerance and investment horizon. If your objective is long-term growth (e.g., 5-10 years), some level of volatility is expected, and a higher risk appetite is necessary to endure short-term market fluctuations. However, if you have a shorter investment horizon or prefer lower risk, it may be worth considering alternative investment options such as our Bond Fund, Balanced Fund, or Amanah Syariah Fund, which offer a more stable approach.

As always, we encourage investors to remain disciplined, diversify their portfolios, and take a strategic approach rather than reacting to short-term market movements. Should you have any further concerns, our team is here to assist you in navigating this challenging market environment.

Q: How do we prepare ourselves for the upcoming Lebaran Holidays?

A: For those invested in our equity fund, remember that market fluctuations are part of the journey, especially for longer-term growth beyond 3 years. Don't be discouraged. Dollar-Cost Averaging (DCA) is a proven way to navigate these periods and potentially benefit from market dips. As we discussed last week, we remain confident in Indonesia's long-term fundamentals. Continuing your investment in our Sustainable Equity Fund is key for long-term returns.

For those seeking stability, holding cash or partially liquidating positions can provide a buffer against potential volatility during the holiday break. To keep short term cash with competitive returns, consider our Simpan Cash Fund and Syariah-compliant Cash Syariah Fund. Once markets reopen on April 8th, investors can reassess and decide their next move.

Thank you.