Market Volatility Amid Foreign Outflows: Smart Strategies for Long-Term Investors
- 2 days ago
- 2 min read
The Jakarta Composite Index (JCI, Indeks Harga Saham Gabungan/IHSG) has experienced significant market volatility over the past two weeks after MSCI decided to freeze the rebalancing of Indonesia’s stock index.
FTSE Russell recently adopted a similar policy due to concerns over free float requirements and ongoing capital market reforms by the Financial Services Authority (Otoritas Jasa Keuangan/OJK) and the Indonesia Stock Exchange (IDX). Earlier, Moody’s also downgraded Indonesia’s credit outlook to “negative,” which has affected investor sentiment toward banking stocks and state-owned enterprises.
How to Respond to Market Volatility Properly
One of the biggest challenges during market downturns is managing emotions and maintaining psychological discipline. Investors often rush to sell their stocks when prices fall without objectively reviewing their portfolios.
However, by understanding the underlying causes of market volatility, investors can make more informed and rational decisions based on valid data rather than short-term fear.
Avoid Panic Selling, Take Advantage of Price Corrections
Always remember that investing should ideally be aligned with long-term goals. Stay committed to your investment plan to capture potential gains when the market enters a recovery phase. Strategies such as buy the dip and averaging down may be worth considering.
Falling stock prices can present buying opportunities, especially for fundamentally strong blue-chip stocks. The assumption is that the decline is temporary and prices will recover over time, supported by solid growth prospects. Conducting technical analysis can also help determine optimal entry points.
Is Stock Investment Still Relevant?
In short, yes. Stocks remain an essential component of a well-diversified investment strategy. Companies with strong fundamentals and consistent dividend payments can potentially generate returns that outpace inflation.
The IDX and OJK have also taken steps to address ongoing market volatility and maintain market stability.
Disclaimer: The content is made for educational purposes, not a recommendation to buy or sell a particular stock. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (OJK).