The investment climate is a field of study that is not only intellectually stimulating but also provides profound insights into a nation’s financial and trade sectors. Within the Indonesian investment ecosystem, the Indonesia Composite Index (ICI)—commonly referred to as the IHSG—stands as a pivotal concept.

Recent developments surrounding the IHSG have captured significant public interest. The UNDIRA community likely observed the index’s dramatic volatility, as it plummeted from its peak of 9,134 to 7,800 in a short span, triggering a temporary total suspension of trading on the Indonesian capital market.

This turbulence unsettled investors, traders, and the Indonesia Stock Exchange (IDX) authorities alike. However, what exactly constitutes the IHSG, and why does it command such significant public attention?

According to the official IDX records, the IHSG is fundamentally an indicator that tracks the price movements of all shares listed on the Indonesia Stock Exchange. Mr. Basuki Toto Rahmanto, S.E., M.M., M.Ak., a lecturer in the Management Study Program at Dian Nusantara University (UNDIRA), clarified that while the IHSG is a primary benchmark for investment, it is not an absolute representation of the broader economy’s growth rate.

"When analyzing the IHSG, we are discussing a primary capital market indicator. However, if the discussion shifts toward the strengthening of the Rupiah, the focus must move to the money market. Even thought there are perceptions regarding how JCI and strength of a currency walks in the same wavelength,  generally the capital and money markets exhibit inverse trends. Regarding the IHSG, it is essential to understand that its movement is largely dictated by the performance of blue-chip stocks rather than providing a holistic reflection of macroeconomic conditions," he explained.

Mr. Basuki further elaborated that the dynamics of the IHSG are generally driven by the cycles of supply and demand; an influx of buyers naturally drives the index upward, and vice versa. Simultaneously, he noted specific internal and external factors that influence these movements.

He outlined that fundamental corporate reports—including financial statements and operational management data—are key determinants of a stock's prospects. Beyond that, external factors such as domestic and international policies, geopolitical tensions, trade flows, and natural disasters can significantly impact market volatility.

This underscores the fact that a stock's trajectory over a specific period is not merely a product of internal corporate performance, but is also heavily influenced by global sentiment, which often falls beyond the control of internal management.

Given that current investment trends serve as both a preventive measure against economic instability and a strategic planning tool for the younger generation, Mr. Basuki urged the UNDIRA community to diligently study market indicators and conduct rigorous technical and fundamental analyses of any prospective stock or asset.

Should there be any interest from UNDIRA friends or the public, UNDIRA provides excellent learning curve towards management related studies in Management Study Programme. UNDIRA also has an Investment Galery as one of its supportng facilities for students to learn more about investment world alongside its opportunities.