Jakarta. In the first trading session on Tuesday, the Composite Stock Price Index at the Indonesia Stock Exchange (IDX) dipped by 1.95 percent to reach 7,144.55, following an initial decline of over 2 percent.

The IDX attributed the subdued performance of the index at the start of the week to the escalating geopolitical tensions in the Middle East, particularly after Iran's retaliatory attack on Israel.

I Gede Nyoman Yetna, Director of Stock Valuation at the IDX, emphasized that geopolitics is among the global factors influencing the index's movement into the red zone.

"I can't definitively say whether this has an effect. However, it's typical for geopolitical tensions to impact index movements," he conveyed to the media at the IDX headquarters in Jakarta on Tuesday.

Nyoman further elaborated that global sentiments act as a guide for investors in allocating capital within the market, leading to dynamic shifts in the index over time. "Market movements correspond to the prevailing conditions," he added.

Hasan Zein Mahmud, former President Director of the Jakarta Stock Exchange, advised investors to prepare for the repercussions of heightened geopolitical tensions in the Middle East following the armed conflict between Iran and Israel.

He recommended that investors increase their cash reserves as a precautionary measure. Alternatively, for those intending to invest, Mahmud suggested considering government bonds (SBN) or mutual funds, especially if their prices experience significant declines.

Meanwhile, Kiswoyo, Head of Investment at Nawasena Abhipraya Investama, advised investors to start accumulating blue-chip stocks when the IDX corrects due to the Iran-Israel conflict while awaiting financial reports from companies for the first quarter of 2024.

Kiswoyo predicted a weakening trend in the index for the week, reflecting sentiments from the global sphere, particularly the impact of heightened tensions in the Middle East following the Iran-Israel conflict.

Meanwhile, the Indonesian rupiah depreciated against the US dollar in Tuesday's trading session. According to Bloomberg data, the rupiah weakened to Rp 16,170 per dollar, marking a decline of 322.0 points (2.03 percent) compared to the previous session.

"Concerns over the postponed US interest rate cut and heightened geopolitical tensions have bolstered the US dollar while putting pressure on the rupiah," financial analyst Ariston Tjendra said on Tuesday.

Chief Economic Affairs Minister Airlangga Hartarto announced President Joko "Jokowi" Widodo's plan to convene an internal meeting on Tuesday to address the Iran-Israel conflict.

Economists caution that Indonesia's economic growth may stall amid worsening Middle East tensions. Iran's recent missile attacks on Israel have raised fears of adverse economic repercussions, including for Indonesia. Previous forecasts suggested Indonesia's economy could achieve a 5.2 percent expansion this year. However, Senior Economist Bambang Brodjonegoro cautioned that any escalation in the Middle East conflict could dampen growth to between 4.6 percent and 4.8 percent.

"If this escalation broadens or extends longer than anticipated, causing uncertainty for various parties, achieving 5 percent growth for Indonesia's economy could prove challenging," Bambang stated during a virtual conference on Monday.

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