Foreign Investors Pivot as IHSG Slumps Amid Escalating Middle East Tensions

The Indonesian stock market faced a significant wave of volatility during the first trading session of the week. On Monday, March 2, 2026, the Composite Stock Price Index (IHSG) closed the midday session deep in the red zone. The market’s downward trajectory was largely fueled by a sudden spike in geopolitical tensions involving the United States, Israel, and Iran, which sent ripples of uncertainty across global and domestic trading floors.

Breaking Down the Midday Numbers

By the close of Session I, the IHSG had plummeted 131.77 points, representing a sharp 1.6% decline, bringing the index to the 8,103.72 level. The breadth of the market was overwhelmingly negative; a staggering 682 stocks weakened, while only 113 managed to post gains. Meanwhile, 163 stocks remained stagnant, showing a clear lack of confidence among local participants as the geopolitical situation worsened. This sell-off also had a direct impact on the overall market capitalization of the Indonesia Stock Exchange, which retracted to Rp14,520 trillion.

Despite the gloomy index performance, trading activity remained high. The total transaction value reached Rp16.57 trillion, involving 31.54 billion shares traded across 2.16 million transactions. This suggests that while many were panic-selling, others were actively repositioning their portfolios to weather the storm.

The Catalyst: Turmoil in the Middle East

The primary driver behind today's market rout is the escalating conflict between the United States, Israel, and Iran. Sentiment soured following reports regarding the death of Iran's Supreme Leader, Ali Khamenei. This development has significantly heightened fears regarding global energy supply disruptions. As the Middle East remains a critical hub for oil and gas production, any threat to regional stability immediately triggers a flight to safety and a re-evaluation of risk assets like stocks. Investors are currently bracing for potential retaliations and further instability that could impact global trade routes.

Foreign Investors: Selling or Buying?

Interestingly, while the overall index tumbled, foreign investors did not entirely abandon the Indonesian market. Throughout the first session, foreign participants recorded a net buy of Rp32.1 billion across all markets. This was the result of a massive tug-of-war between foreign selling (totaling Rp4.2 trillion) and foreign buying (also totaling approximately Rp4.2 trillion). This marginal net buy suggests that international funds are rotating their capital into specific defensive or high-conviction stocks rather than exiting the country altogether.

Stocks in the Spotlight: Top Buys and Sells

Adaro Andalan Indonesia (AADI) emerged as the primary target for foreign buyers, recording the largest net foreign buy at Rp168.2 billion. This was followed by Nusantara Sawit Sejahtera (NSSS) with Rp99.7 billion and Petrosea (PTRO) with Rp90.7 billion. These sectors—particularly energy and palm oil—often act as hedges when global supply chains are threatened.

On the flip side, some major names were hit hard by foreign outflows. Medco Energi (MEDC) took the biggest hit with a net sell of Rp270.6 billion. This was followed by the banking giant Bank Mandiri (BMRI), which saw Rp62.9 billion in foreign capital exit, and Elnusa (ELSA) with a net sell of Rp61.1 billion. The exit from MEDC and ELSA is particularly notable given their energy links, suggesting a cautious stance on specific corporate exposures despite the rising oil price environment. Markets will continue to monitor the Middle East situation closely as they prepare for the second trading session.