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Emergency PPKM: Market Remains Resilience?

The number of positive cases of COVID-19 in Indonesia continues to proliferate. On Thursday (6/29), there were 20,467 cases reported. Wiku Adisasmito, a spokesman for the COVID-19 Task Force, said the second wave of this pandemic in Indonesia is currently underway. The surge in COVID-19 infections began one week after the Lebaran vacation, indicating that the impact of the long holiday can happen swiftly. Moreover, the emergence of several variants of the novel coronavirus that had invaded Indonesia, aggravated by high mobility, has also contributed to the increase. In order to suppress the current spike in cases, the Indonesian government has decided to impose an emergency community activity restriction, also known as Micro-Community Activity Restrictions (PPKM), which will be applied in Java and Bali from July 3 to July 20, 2021. The implementation of PPKM has been officially announced by President Jokowi, led by The Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Panjaitan, and he then explained in detail the new rules for implementing a special emergency PPKM. This restrictive policy includes 100% WFH for non-essential sector workers, full implementation of online learning, the closure of shopping centers and religious institutions, prohibition on dine-ins, as well as tight health protocols on construction operations. The current circumstance is expected to stifle economic recovery, adding to that, reflecting on the PSBB's implementation in 2020, which resulted in a significant drop in the stock market. This last year's phenomenon conceives investors' wonder if the market is ready to handle this newly added PPKM regulation?

By looking at the global perspective, the global stock market slumps on Tuesday (6/29), caused by the outbreak of Delta, the new COVID-19 variant. According to Reuters, the MSCI (Morgan Stanley Capital International) world stock index that tracks 50 countries’ stock prices was having a sudden drop of 0.14% due to the fall of Asia stock index prices. Even though, European and US stock indexes were moving toward a positive trend. Moreover, concerns toward the new Delta variant worsened the stock market sentiment, which was already harmed by the Fed decision to lean toward hawkish policy (The interest rate will be higher). The infection rate in Asian countries has not seen the light at the end of the tunnel, as it is still continuing to surge and not giving out signals to improve in the near future. Furthermore, the worsening COVID-19 infection rate in Asia has caused several countries to uphold further social restriction policy, and even some countries have chosen to resort to lockdown policy. In essence, the Fed decision towards a more hawkish policy and the soaring of COVID-19 infection rate in Asia have caused the stock market to weaken. The impact of the two, as the data on Tuesday (6/29) it can be seen the Japanese Nikkei 225 plummet by 1.01% to 28,754.50, the South Korean Kospi weakened by 0.5% at 3,285.38, ASX 200 dropped 0.51% to 7,270.20, and the Chinese Shanghai Composite and Shenzhen Component also slump 0.95% and 0.96% to 3,572.27 and 15,005.31 respectively. Additionally, the Hong Kong Hang Seng stock index also deteriorated by 0.92% to 29,012.00.

In Indonesia, the emergency PPKM will negatively impact sectors that were affected by the previous restrictions such as retail, restaurants, transportation, tourism, entertainment, and sectors that require direct interaction with consumers. PT Matahari Putra Prima Tbk (MPPA), for instance, provides the company's retail formats like Hypermart, Primo, Boston, Foodmart, Hyfresh, and FMX. They recorded a 21% drop in sales to US$1.55 million or equivalent to Rp22 billion (exchange rate of Rp14,000/US$) from the same period in 2020, which is US$1.95 million. Shopping mall stocks were seen to decrease on Wednesday (6/30) after the PPKM notice. Lippo Karawaci (LPKR) shares for example, fell 2 points (1.26%) to Rp157. PT Pakuwon Jati Tbk (PWON) from the property sector with their three large malls including Gandaria City, Kota Kasablanka, and Blok M, saw its stock also decline 8 points (1.78%) to Rp442. Nevertheless, Head of Equity Trading MNC Sekuritas Medan, Frankie W Prasetio, said that although the surge in positive cases of COVID-19 in Indonesia is still overshadowing the IHSG movement and would have a destructive impact on the market in the short run, the implementation of emergency PPKM is expected to impact the market in the long run positively. In this regard, investors are more prepared to face the pandemic situation this year compared to the previous year. Besides, capital market players do not see the surge in the number of COVID-19 cases as a threat. All in all, the existence of PPKM will undoubtedly have a domino effect on the economy and a decline in overall domestic market economic activity, especially since the red zones are generally centers of economic activity. However, in the capital market, investors are no longer afraid of the PPKM regulation, considering their prudence with last year's conditions.

Source :

CNBC Indonesia

IDX Channel


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