Analysis of the Effect of Macroeconomic Indicators and the Dow Jones Index on the JCI on the Indonesia Stock Exchange

Oct 13, 2025 by magicalceylontours.com 94 views

Analysis of the Effect of Macroeconomic Indicators and the Dow Jones Index on the JCI on the Indonesia Stock Exchange

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a significant impact on the country's economy. The Composite Stock Price Index (CSPI), also known as the Jakarta Composite Index (JCI), is a widely used indicator to measure the performance of the IDX. Various macroeconomic indicators and global market trends can significantly influence the JCI movement. This study aims to analyze the effect of macroeconomic indicators and the Dow Jones index on the JCI on the Indonesia Stock Exchange.

Methodology

This study uses secondary data taken per quarter from monthly data between 2010 to 2020. The data analysis model is carried out with the Autoregressive Distributed Lag (ARDL) approach. The macroeconomic indicators taken in this study include inflation, exchange rate (exchange rate), interest rates for Bank Indonesia Certificate (SBI), and the Fed's benchmark interest rate. In addition, another variable used is the Dow Jones index.

Results

The results of the analysis with the ARDL model show that in the short term, the exchange rate (exchange rate) has a significant negative effect on the JCI. This shows that if the rupiah exchange rate against foreign currencies weakens, then this can have a negative impact on the JCI performance. Conversely, the Fed's benchmark interest rate has a positive effect, although the effect is not significant. This indicates that changes in the benchmark interest rate in the United States may not have a strong direct impact on the Indonesian stock market in the short term.

Furthermore, the previous period of the Fed benchmark interest rate and the Dow Jones index showed positive and significant effects on the JCI. That is, the US stock market performance reflected in the Dow Jones index can have a positive impact on the JCI, showing the connection between the global market and the Indonesian stock market.

Long-Term Effects

In the long run, the results show that the exchange rate (exchange rate) and the fed's benchmark interest rate did not significantly effect on the JCI, showing that the JCI tended to be more stable in dealing with fluctuations in the exchange rate and US benchmark interest rates. On the other hand, the SBI interest rate variable has a positive but not significant effect on the JCI, while the Dow Jones index still has a positive and significant effect. This underlines the importance of the Dow Jones index as one of the global market indicators that can affect the direction of the JCI movement in a longer period of time.

Implications for Investors and Market Analysts

This analysis provides important insights for investors and market analysts in making investment decisions. Considering the significant influence given by the Dow Jones index on the JCI, investors are advised to continue to pay attention to the development of the global stock market, especially in the US, to get a more comprehensive picture of the potential for the JCI movement going forward. In addition, an understanding of macroeconomic influences in the country is also important in predicting the CSPI trend, especially related to the conditions of exchange rates and interest rates that can affect market sentiments.

Conclusion

In conclusion, this research confirms that both the local and global macroeconomic factors contribute to the JCI movement, and a good understanding of these two aspects becomes very important for market participants in dealing with the dynamics that occur in the Indonesia Stock Exchange. The findings of this study can be useful for investors, market analysts, and policymakers in making informed decisions and developing strategies to navigate the complexities of the Indonesian stock market.

Recommendations

Based on the findings of this study, the following recommendations are made:

Investors should continue to pay attention to the development of the global stock market, especially in the US, to get a more comprehensive picture of the potential for the JCI movement going forward.
Market analysts should consider the impact of macroeconomic indicators and the Dow Jones index on the JCI movement when making investment decisions.
Policymakers should develop strategies to mitigate the negative effects of exchange rate fluctuations on the JCI performance.
Investors and market analysts should also consider the impact of interest rates on the JCI movement, especially in the long run.

Limitations of the Study

This study has several limitations that should be noted. Firstly, the data used in this study is limited to quarterly data from 2010 to 2020. Secondly, the ARDL approach used in this study may not capture the complexities of the Indonesian stock market. Finally, the study only considers a limited number of macroeconomic indicators and global market trends.

Future Research Directions

Future research should aim to address the limitations of this study by using more comprehensive data and advanced econometric techniques. Additionally, future research should consider the impact of other macroeconomic indicators and global market trends on the JCI movement.
Frequently Asked Questions (FAQs) about the Analysis of the Effect of Macroeconomic Indicators and the Dow Jones Index on the JCI on the Indonesia Stock Exchange

Q: What is the purpose of this study? A: The purpose of this study is to analyze the effect of macroeconomic indicators and the Dow Jones index on the Composite Stock Price Index (CSPI) on the Indonesia Stock Exchange.

Q: What macroeconomic indicators were used in this study? A: The macroeconomic indicators used in this study include inflation, exchange rate (exchange rate), interest rates for Bank Indonesia Certificate (SBI), and the Fed's benchmark interest rate.

Q: What is the Autoregressive Distributed Lag (ARDL) approach? A: The ARDL approach is a statistical method used to analyze the relationship between variables over time. It is a combination of autoregressive and distributed lag models.

Q: What were the results of the analysis? A: The results of the analysis show that in the short term, the exchange rate (exchange rate) has a significant negative effect on the JCI. The Fed's benchmark interest rate has a positive effect, although the effect is not significant. The previous period of the Fed benchmark interest rate and the Dow Jones index showed positive and significant effects on the JCI.

Q: What are the implications of the findings for investors and market analysts? A: The findings of this study suggest that investors and market analysts should consider the impact of macroeconomic indicators and the Dow Jones index on the JCI movement when making investment decisions. Investors should also pay attention to the development of the global stock market, especially in the US, to get a more comprehensive picture of the potential for the JCI movement going forward.

Q: What are the limitations of this study? A: The limitations of this study include the use of limited data, the ARDL approach may not capture the complexities of the Indonesian stock market, and the study only considers a limited number of macroeconomic indicators and global market trends.

Q: What are the recommendations for policymakers? A: Policymakers should develop strategies to mitigate the negative effects of exchange rate fluctuations on the JCI performance. They should also consider the impact of interest rates on the JCI movement, especially in the long run.

Q: What are the future research directions? A: Future research should aim to address the limitations of this study by using more comprehensive data and advanced econometric techniques. Additionally, future research should consider the impact of other macroeconomic indicators and global market trends on the JCI movement.

Q: What are the implications of the findings for the Indonesian economy? A: The findings of this study suggest that the Indonesian economy is closely linked to the global economy, particularly the US economy. The performance of the US stock market, as reflected in the Dow Jones index, can have a significant impact on the JCI movement.

Q: What are the implications of the findings for investors in the Indonesian stock market? A: The findings of this study suggest that investors in the Indonesian stock market should be aware of the potential risks and opportunities associated with the JCI movement. They should consider the impact of macroeconomic indicators and the Dow Jones index on the JCI movement when making investment decisions.

Q: What are the implications of the findings for market analysts in the Indonesian stock market? A: The findings of this study suggest that market analysts in the Indonesian stock market should consider the impact of macroeconomic indicators and the Dow Jones index on the JCI movement when making investment decisions. They should also pay attention to the development of the global stock market, especially in the US, to get a more comprehensive picture of the potential for the JCI movement going forward.