Mudik Restriction’s Mark on IHSG

Since the government officially announced the first entry of COVID-19 into Indonesia, the government has implemented several policies to reduce the spread of COVID-19, including PSBB (Pembatasan Sosial Berskala Besar). PSBB restricts certain activities of residents in areas suspected of being infected by the coronavirus to prevent further spread of coronavirus and then PPKM (Penerapan Pembatasan Kegiatan Masyarakat), namely the application of restrictions on community activities enforced in parts of Java Bali. From January 11 to 25, 2021, PPKM replaced the term PSBB in Java and Bali. In 2020, the government banned Mudik through Ministerial Regulation Number 25 of 2020. As a follow-up measure to the Mudik ban in 2020, the government said through the Ministry of Transport's spokesperson, Adita Irawat: "The arrangement is a temporary ban on the use of transportation for Mudik activities during the Lebaran period in 2020." The regulation applies to air, sea, land, and rail transportation, especially private vehicles or public transit that carry passengers. This year, the government also issued the same regulations, banning Eid Al-Fitr Mudik through Ministerial Regulation Number 13 of 2021 (on the prevention of transportation of COVID-19 during the Eid Al-Fitr 1442 Hijri period). According to these regulations, the ban on mudik will take effect from May 6 to 17, 2021. These rules are almost the same as last year, but this year there are more guard stations, and the sanctions are more rigid, such as being told to turn around, fines or even cancellation of their driving license. As a result, some companies' revenues related to transportation and tourism have also stagnated, as in some companies' revised financial reports in the second quarter of 2020.

Prior to the COVID-19 outbreak, transportation and automotive sectors usually received positive sentiment several days leading up to Ramadhan. Based on Bloomberg data in 2018, the share price of PT Jasa Marga (Persero) Tbk. appreciated 2.41% even from a month before which on May 2018. Frankie Wijoyo Prasetio, Head of Equity Trading Phintraco Sekuritas Medan explained on (06/24/2018) that the share price for PT Jasa Marga (Persero) Tbk. (JSMR), PT Citra Marga Nusaphala Persada Tbk. (CMNP), and PT Nusantara Infrastructure Tbk. (META) had experienced an increase in the past month due to the increased sentiment in the volume of vehicle traffic during Eid Al-Fitr 2018. In 2019, shares from sectors such as consumer goods, retail, livestock, media, entertainment, telecommunications, transportation, and restaurant rose from April 30th 2019 until May 31st 2019. Share price of PT Media Nusantara Citra Tbk. (MNCN) for example, rose by 21.28% throughout May 2019. However, when COVID-19 hit Indonesia in March 2020, mudik restriction was enforced from April 24th until May 31st. In response to that, President Director of the Indonesia Stock Exchange (IDX), Inarno Djajadi, said the ban on mudik policy that the government enforced did not affect the performance of the Indonesian stock market as a whole (04/24/2020). Contrary to Mr. Djajadi’s claim, the IHSG weakened 37.35 points or 0.81% to the level of 4,556 Friday afternoon (04/24/2020) and it fell 97.49 points or 2.12% to 4,496.06 at the close of the first session on the same day.

Paralleling this year's situation on the restriction for 'mudik' activity, we discern the impact on the capital market. On Tuesday (4/13), IHSG closed at 5,927.44, 0.36% lower than the previous date, Monday (4/12) at 5,948.57. To elucidate further, IHSG dropped 0.72% to 5,905.48 in the first trading session (4/13). Data shows 130 stocks rose, 339 fell, and 149 others were stagnant. Binaartha Securities analyst Aji Nafan commented that this restriction would influence IHSG. He added, "During Eid Al-Fitr, this 'mudik' restriction policy that the government approves will sure produce negative sentiment for the index." stated Nafan to Bisnis on (4/13). 'Mudik' restriction during Ramadhan 2021 (1442 Hijri) means there will be less mobility by the people, thus will lessen the use of toll roads, especially toll roads that are often crossed by travelers, namely toll of Trans-Java, Cipularang, Trans-Sumatra, and other tolls that are integrated with the three of them. Monday (4/5) PT Waskita Karya Tbk (WSKT), which runs in the construction and transportation sectors, falls up to 6.64% to a level of USD 1,055/unit. The famous PT Jasa Marga Tbk (JSMR) fell 0.48% to Rp 4,110/unit on (4/5). As for the other toll road stocks, on Monday (4/5), PT Citra Marga Nusaphala Persada Tbk (CMNP) closed up 0.5% to USD 2.010/unit. In essence, the restriction of Ramadhan 'mudik' tradition widely impacts not only on how people celebrate Ramadhan but on the capital market landscape as well.

Sources:

Bisnis

CNBC Indonesia

Detik Finance

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