Investors and market analysts should pay attention to the development of international and regional stock exchange indexes

Oct 13, 2025 by windailys.com 132 views

The Indonesian Stock Exchange (IDX) has undergone significant development since the Indonesian government removed the limits of foreign ownership in the capital market in September 1997. With the increasingly open market, many factors affect the IDX index, including the foreign stock exchange index and value exchange of US dollars (USD). This study aims to understand the extent of the influence of these factors on the Composite Stock Price Index (CSPI) on the IDX.

Research Hypothesis

In this study, there were three hypotheses submitted:

The International Stock Exchange Index affects the Indonesia Stock Exchange Index. This hypothesis suggests that changes in international stock exchange indexes can have a direct impact on the performance of shares in Indonesia.
The regional stock exchange index has an influence on the Indonesia Stock Exchange Index. This hypothesis implies that regional stock exchange indexes can also affect the performance of shares in Indonesia.
The United States dollar exchange rate affects the Indonesia Stock Exchange Index. This hypothesis suggests that changes in the US dollar exchange rate can have a significant influence on the performance of shares in Indonesia.

Research Variable

The independent variable tested in this study consisted of ten stock indexes, which included six international indexes - SS & P 500 (US), FTSE 100 (England), Dax 30 (Germany), Nikkei 225 (Japan), Hangseng (Hong Kong), and SCP (China) - and three regional indexes, namely KLCI (Malaysia), STI (Singapore), and PCP (Philippines). The dependent variable in this study is the JCI from the Indonesia Stock Exchange.

Method of collecting data

Data was collected through documentation studies by accessing official sites such as www.econstats.com and www.oanda.com. The data obtained are then grouped into three time periods: the entire study period, the period before the 2008 financial crisis, and the period during the 2008 financial crisis. The analysis was carried out using various statistical methods, including descriptive analysis, correlation analysis, stationary tests, cointegration tests, tests Granger causality, and regression test.

Research result

The analysis results show a significant effect at the level of significance α = 5% as follows:

International stock exchange index: There is a significant influence of the International Stock Exchange Index on the JCI both in the entire study period and in the period before the 2008 financial crisis. However, in the period during the 2008 financial crisis, this influence was reduced, except for the index SCP.
Regional stock exchange index: Regional stock exchange index shows a significant effect on the JCI in the three research time coverage, including during the 2008 financial crisis.
United States Dollar Exchange Rate: Dollar exchange rate does not show a significant effect on the JCI in the three periods of time analyzed.

Additional Analysis

The results of this study indicate that the level of integration of the Indonesia Stock Exchange with the international capital market is quite high. This reflects that the changes that occur in the international and regional stock exchange index can have a direct impact on the performance of shares in Indonesia. On the other hand, the stability of the US dollar exchange rate does not seem to have a significant influence, which may be caused by the local nature of many investments in Indonesia.

Implication of the Study

The findings of this study have several implications for investors and market analysts. Firstly, the integration of the Indonesian stock market with the international market can be an opportunity for investors to explore greater benefits, although it must be accompanied by good risk management, especially in dealing with fluctuating global conditions. Secondly, investors and market analysts must pay attention to the development of international and regional stock exchange indexes in making investment decisions on the IDX. This study confirms that understanding global factors is also important to evaluate the potential movement of domestic stock index.

Conclusion

In conclusion, the integration of the Indonesian stock market with the international market can be an opportunity for investors to explore greater benefits, although it must be accompanied by good risk management, especially in dealing with fluctuating global conditions. The findings of this study also highlight the importance of understanding global factors in evaluating the potential movement of domestic stock index.

Recommendation

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

Investors and market analysts should pay attention to the development of international and regional stock exchange indexes in making investment decisions on the IDX.
Investors should adopt good risk management strategies, especially in dealing with fluctuating global conditions.
The Indonesian government should continue to promote the integration of the Indonesian stock market with the international market, while also ensuring that the local market is protected from potential risks.

By following these recommendations, investors and market analysts can make more informed investment decisions, and the Indonesian government can promote the growth and development of the Indonesian stock market.

In this article, we will answer some of the most frequently asked questions about the analysis of the effect of foreign stock exchange index and United States dollar exchange rates on the Indonesian Stock Exchange Index.

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of foreign stock exchange index and United States dollar exchange rates on the Indonesian Stock Exchange Index.

Q: What are the research hypotheses of this study?

A: The research hypotheses of this study are:

The International Stock Exchange Index affects the Indonesia Stock Exchange Index.
The regional stock exchange index has an influence on the Indonesia Stock Exchange Index.
The United States dollar exchange rate affects the Indonesia Stock Exchange Index.

Q: What are the independent and dependent variables of this study?

A: The independent variables of this study are the foreign stock exchange index and the United States dollar exchange rate. The dependent variable is the Indonesia Stock Exchange Index.

Q: What are the methods used in this study?

A: The methods used in this study include descriptive analysis, correlation analysis, stationary tests, cointegration tests, tests Granger causality, and regression test.

Q: What are the results of this study?

A: The results of this study show that:

The International Stock Exchange Index has a significant influence on the Indonesia Stock Exchange Index in the entire study period and in the period before the 2008 financial crisis.
The regional stock exchange index has a significant effect on the Indonesia Stock Exchange Index in the three research time coverage, including during the 2008 financial crisis.
The United States dollar exchange rate does not show a significant effect on the Indonesia Stock Exchange Index in the three periods of time analyzed.

Q: What are the implications of this study?

A: The implications of this study are:

The integration of the Indonesian stock market with the international market can be an opportunity for investors to explore greater benefits, although it must be accompanied by good risk management, especially in dealing with fluctuating global conditions.
Investors and market analysts must pay attention to the development of international and regional stock exchange indexes in making investment decisions on the IDX.
Understanding global factors is also important to evaluate the potential movement of domestic stock index.

Q: What are the recommendations of this study?

A: The recommendations of this study are:

Investors and market analysts should pay attention to the development of international and regional stock exchange indexes in making investment decisions on the IDX.
Investors should adopt good risk management strategies, especially in dealing with fluctuating global conditions.
The Indonesian government should continue to promote the integration of the Indonesian stock market with the international market, while also ensuring that the local market is protected from potential risks.

Q: What are the limitations of this study?

A: The limitations of this study are:

The study only analyzed the effect of foreign stock exchange index and United States dollar exchange rates on the Indonesia Stock Exchange Index.
The study did not consider other factors that may affect the Indonesia Stock Exchange Index.
The study only used secondary data, which may not be comprehensive or up-to-date.

Q: What are the future research directions?

A: The future research directions are:

To analyze the effect of other factors on the Indonesia Stock Exchange Index.
To use primary data to collect more comprehensive and up-to-date information.
To conduct a more in-depth analysis of the relationship between the Indonesia Stock Exchange Index and the international and regional stock exchange indexes.