The Indonesian stock market often experiences panic selling. Panic selling itself can be interpreted as a massive selling action that occurs in a short time (panic) carried out by market participants due to bad news that has an impact on the stock market. Notice the last words "impact on the stock market". The next question is, how much impact does bad news have on the stock market?
When panic selling occurs, usually most analysts, both amateur analysts and professional analysts, including traders will always say that the stock market will go down again. Or, "This is just the beginning of foreigners selling stocks, later the stock market will fall even more". However, from the many opinions and comments of traders, in my view, there are also many who deliberately messed up by writing that the JCI will fall again to 4,000 blah blah blah with the aim of making the situation more panicky.
Usually beginners who hear these ravings immediately panic, and start to be afraid to trade. In fact, the impact of bad news on the stock market is not necessarily as big as feared.
"Then Bung Heze, in what cases is panic selling reasonable and unnatural?" Ask you
Panic selling can occur not only in the JCI, but can occur in just one stock due to bad news. But in this post, I will discuss panic selling in terms of the overall market, namely the JCI. Because the panic was global, it also suppressed most stock prices. Panic selling occurs because of two things: the poor domestic economic conditions (internal factors) and foreign conditions (external factors).
Panic selling in Indonesia, one of which happened in 2015, when the Indonesian economy was sluggish. Starting from the end of April 2015 until October 2015, there was a massive stock sell-off. When businesses lose, economic growth weakens, and almost all business sectors are sluggish, that's when market participants start selling their portfolios.
Panic selling that occurs due to Indonesia's economic conditions / internal factors is what you should be aware of, because this condition usually occurs in a fairly long period of time. In 2015, accounting for more than 6 months the Indonesian stock market plummeted. The JCI, which was initially at 5,524, fell to 4,200. If you have seen the unfavorable economic conditions in Indonesia, it's a good idea to immediately sell your portfolio.
Indonesia's economic condition, which has begun to stagnate, usually begins with market euphoria, but is not accompanied by good economic fundamentals. This is what is called a bubble. If one day the bubble bursts, it is predictable, the JCI will fall and market participants will do panic selling. This is what happened in 2015.
The second panic selling occurred due to external/foreign factors. Panic selling due to external factors is what often makes me (and maybe you) wonder, how come foreign markets are having problems and the Indonesian stock market is falling too?
For example, when Donald Trump was elected president, not only the US stock market fell, but also the Indonesian stock market. Another example, when the UK leaves the European Union or the term is Brexit, the Indonesian stock market immediately plummets in one day.
When market participants started to show panic selling attitude, then as I said earlier, pro and amateur analysts, traders began to say: "The stock market will fall deeper". "This is just the beginning of the fall of the JCI". "JCI going to 4,000" And there's still a lot of similar babble.
In fact? As you know, the impact of Brexit is only one day on the Indonesian stock market. The Trump Effect didn't last long either, because after that the JCI started to rise from 5,000 and tested resistance at 5,300. It turned out that what was feared was not proven at all.
So, what you need to be aware of is when panic selling occurs on internal factors. Because if Indonesia's economy is in a bad condition, like it or not, the JCI will immediately plummet, and the decline will not only occur in a few days. If panic selling occurs due to external factors, then it is only temporary. Because after all, Indonesia will not feel the direct impact of Brexit, the Trump Effect or other impacts that occur abroad.
If the JCI falls because of overseas elections, or there is a foreign conflict (which actually has no effect on Indonesia), then you should not panic. You can reduce your stock spending first, and wait for another buy at a lower price. In fact, if you panic, are afraid to trade, and when it's time for the JCI to rebound (because the decline in the JCI due to external factors is usually only briefly), you will miss the train. Too bad right?
