Facing Stock Market Challenges Amid the Attraction of High Interest Rates

Jakarta - In the first semester of 2024, the performance of the stock market in Indonesia faces quite significant challenges. Samuel Kesuma, an investment expert from PT Manulife Asset Management Indonesia (MAMI), revealed that one of the main factors influencing this situation is the high interest rates that attract the attention of investors. In an atmosphere where returns from risk-free instruments are still high, interest in investing in shares tends to decline.
In a virtual discussion, Samuel explained that shares are usually the choice for investors looking for growth, although the risks that accompany them cannot be ignored. However, in current conditions, where high interest rates offer more attractive returns, investing in the stock market has become less desirable. "Stock instruments are instruments where people look for growth, but people are aware that there are risks. In a situation where the risk-free yield is still quite high, interest in investing in shares tends to be lower," said Samuel.
Nevertheless, Samuel is optimistic that the second half of this year will bring change. An expected drop in interest rates could change market direction and increase interest in stocks. "If the yield from risk-free decreases, of course interest in investing in shares will be higher," he explained.
However, Samuel also emphasized that apart from lowering interest rates, the attractiveness of the stock market will increase if issuers show better profit growth, something that has not been seen significantly in the first semester. With better liquidity conditions, strengthening of the rupiah, and more positive economic activity, there is potential for corporate profit growth to gradually improve.
However, another challenge faced in the first semester was the selling action from foreign investors. Data shows that in April and May 2024, foreign investors recorded quite large net outflows. Samuel explained that this happened because of uncertainty regarding the direction of the Fed's policy, even though US economic data at that time showed quite significant strength.
In the midst of these challenges, investors are expected to remain careful and consider various factors before making investment decisions. The second half of 2024 brings new hope for better stock market performance, with a cut in interest rates expected to be the main trigger. However, there are still challenges and uncertainties that need to be anticipated on the road to greater market stability.