"The Effects of Social Media and Fluctuations on the Indonesian Stock Exchange"

Sensitive Period in the Indonesian Stock Exchange

The widespread use of social media has significantly shaped individual investor behavior in the Indonesian Stock Exchange (IDX). In this process, the rapid price increases seen in certain stocks followed by sharp corrections have brought discussions about manipulation techniques known as "pump and dump" back to the forefront.

Case Study: Significant Losses in a Short Time

A 39-year-old investor working at a digital advertising company in Jakarta bought shares of a bank during a period when an artificial rally peaked. However, within just a few days, the rapid decline in stock prices left the investor facing serious losses.

Reflections of the "Goreng Saham" Culture

The widespread practice of "goreng saham" in the investment world is increasing the perception of systemic fragility in the markets. Critics argue that regulatory negligence has caused retail investors to incur significant losses over the past decade, and this situation has combined with inadequate oversight in fraud investigations. MSCI had warned that it might downgrade its classification of Indonesian stocks due to uncertainties regarding shareholder structures. Following this warning, significant fluctuations were observed in the Jakarta Composite Index on January 28.

Macroeconomic Uncertainty and Dollar Pressure

The Indonesian rupiah has weakened against the U.S. dollar amidst concerns over public finance and state interventions. Fragile risk appetite has deepened stock market fluctuations, creating uncertainty among investors. An example of this situation is the appreciation of a Jakarta-based bank in 2021 amid socializing rumors.

New Approaches to Market Surveillance

In the face of market stagnation and uncertainties, the National Economic Council aims to create a reform agenda for tighter monitoring in market surveillance and tracking unusual transactions. Proposals include the adoption of artificial intelligence-based monitoring systems and addressing conflicts of interest in stock ownership structures.

Free Float Ratio and Manipulation Risks

Capital market experts point out that raising the minimum free float ratio could reduce the risk of price manipulation. Allowing companies to reach a broader investor base may contribute to increased market liquidity and limit sudden price movements.