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• Oil Prices Fall, What About the IHSG?

Oil Prices Fall, What About the IHSG?

March 09, 2020

The IHSG fell 6.56% today as oil prices dropped. However, this is not only due to falling oil prices, but also coincides with a devaluation of the Yuan.

Indonesia's economy is indeed still dependent on commodity prices (e.g. coal, palm oil, nickel, crude oil). A decline in crude oil prices could potentially deliver negative sentiment to other commodities. Beyond the potential reduction in the country's revenue sources, there is also the potential for a slowdown in economic growth in the short term.

The fall in oil prices will certainly create a market "shock", but as a net importer of oil, Indonesia's economic position is not too bad. Lower oil prices could bring about some positive possibilities, such as certain sectors being able to record higher profits due to reduced production costs plus the potential for increased demand from the drop in fuel prices.

In broad terms, the current market frenzy is still overshadowed by Corona. Many employees are less productive, and purchasing power has also declined as many people are quarantined or reducing their activities. It is hoped that once a Corona vaccine is found or there are no new cases, the market will rebound.

It has also been reported that 53% of Corona patients have recovered, so hopefully this fever will end soon!