Gold Surges, IDX Slips. Should you Worry?
Gold soars to record highs as Indonesia’s stock market dips following a cabinet reshuffle. Discover what these market moves mean for your investments.
Markets kept us on our toes on Monday, gold jumped to a record high while the IDX slid right before the closing bell. Let’s unpack what happened and why it matters for us as investors.
Gold at an All-Time High
Gold stole the spotlight on Monday, climbing to a record high of USD $3,600/oz. Demand for gold was fueled by expectations of a Fed rate cut, weak U.S. jobs data (22k vs 75k forecast), and a higher-than-expected U.S. unemployment rate (4.3%). In uncertain times, it’s common to see investors turning to “safe haven” assets, thus pushing gold higher.
Meanwhile, back home…
Local markets told a different story. The JCI (-1.3%) fell minutes before the close, after President Prabowo Subianto reshuffled members of the “Kabinet Merah Putih”, affecting five ministers including Finance Minister Sri Mulyani. The USD/IDR fell to 16,520 at market close.
Markets didn’t take the news well, especially foreign investors, who have long valued Sri Mulyani’s credibility in managing the country’s finances. Concerns quickly arose over whether her successor, Purbaya Yudhi Sadewa, could maintain the same level of confidence in managing the country’s wealth. That lack of clarity triggered a sell-off by foreign investors to reduce exposure mainly in the blue-chip stocks.
Looking Ahead: Opportunity Amid Uncertainty
While today’s sell-off looks sharp, we also see potential for a rebound if things play out well, especially if the new Finance Minister proves capable of maintaining stability. We had already planned to reposition our fund strategies, and today’s price action gives us the opportunity to take a closer look at select blue-chip names.
Nevertheless, we remain cautious. We expect investors, including ourselves, to adopt a ‘wait-and-see’ stance until there is clearer evidence that the new leadership’s policies can deliver tangible economic results.