Jakarta. Indonesia’s stock market crash is a wake-up call for investors who buy shares on social media tips rather than company fundamentals, Recompound co-founder Toby Limanto said, warning that hope is no substitute for an investment strategy.

The Jakarta Composite Index (JCI) suffered a historic single-day sell-off on Oct. 16 after global index provider MSCI said it was considering downgrading Indonesia from emerging-market to standalone-market status over concerns about market accessibility, share ownership transparency, and suspected coordinated trading.

Toby said investors should reassess why they own particular stocks instead of reacting emotionally to falling prices.

“Hope is never a good strategy in investing,” he told the Jakarta Globe.

Investors who bought shares primarily in anticipation of their inclusion in MSCI indexes should reconsider their positions, he said, as that investment thesis may no longer hold. Those who invested based on company fundamentals, however, should examine whether earnings, cash flow and business prospects remain in line with their expectations.

“If your reason for owning something is gone, it’s usually better to sell, or at least to build a new thesis before you decide to keep holding,” Toby said.

He declined to predict when the market would rebound or where the JCI would end the year, saying unexpected domestic and international developments made short-term forecasts unreliable. Investors should focus instead on the underlying performance of businesses, he said.

Investor Boom Amid Market Losses

Indonesia added 9.9 million capital market investors in 2026, bringing the total to more than 30 million, despite steep stock market losses and shrinking market capitalization.

Toby attributed the growth partly to the accessibility of securities apps and the proliferation of social media content promoting stock trading as a potential source of income. However, he believes most new investors remain driven by short-term enthusiasm rather than a commitment to long-term wealth creation.

Trading apps make transactions increasingly convenient, while brokers have commercial incentives to encourage trading activity, he said. Long-term investing requires more patience, with returns measured over years rather than daily price movements.

More than half of Indonesia’s capital market investors, or 54.7%, are under 30, reflecting younger people's easier access to stocks compared with property, which requires substantially more initial capital.

Age alone, however, does not determine financial literacy or investment discipline, he said. Investors of all generations are exposed to social media hype, while older generations generally hold more wealth because they have had longer to accumulate assets.

Before investing, prospective investors should establish emergency savings, maintain manageable debt and have a stable income. They should also understand their risk tolerance and avoid concentrating their money in stocks they do not understand.

Calls for Stronger Market Enforcement

Toby said retail investors have more flexibility than institutional investors to change strategies when market conditions shift. But that flexibility can also encourage impulsive decisions driven by fear or the fear of missing out.

He called for stronger enforcement against market manipulation and greater accountability for those responsible for suspected coordinated trading, arguing that regulators must demonstrate that misconduct carries consequences.

The MSCI warning could provide momentum for Indonesia to accelerate capital market reforms, he said. Better investor education and stricter oversight of financial influencers are also needed to curb misleading stock recommendations.

He pointed to India’s securities regulator as an example of authorities taking action against unregistered financial advisers and misleading online investment content.

He expects the downturn to push many inexperienced investors away, while only a smaller group will use the experience to improve their investment discipline.

For Indonesia to build a more resilient capital market, investors must become more critical of stock recommendations and focus on business fundamentals rather than market hype.

“When investors are mostly greedy and fearful, it is very easy for price manipulators to run coordinated trading,” he said. “When investors are more critical, it is much harder.”

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