THE INFLUENCE OF MAJOR WORLD INDICES AND FOREIGN INVESTMENT IN INDONESIA STOCK MARKET AND ITS IMPLICATION TO FUTURE ACTIONS

• Main Author: Mulyana
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/53326
• Institution: Institut Teknologi Bandung

The objectives of this study were to investigate the influence of the major world indices such as Dow Jones (DJI), FTSE 100 (FTSE), Hang Seng (HSI), Shanghai Composite Index (SSE), Nikkei 225 (N225), Singapore Straits Times (STI), and Korea Composite Stock Price Index (KOSPI) as well as the influence of Net Foreign Flow to Jakarta Composite Index (JCI) in Indonesia Stock Market during January 2000 until December 2019. The research methodology used is a multiple linear regression analysis using Statistical Product and Service Solution (SPSS). The data population used in this research is the index price movement of indices data and the ratio of the purchase value by foreign investors during the 20 years of January 2000 until December 2019. The results of this research have shown that the index price movement on a monthly basis of Dow Jones (DJI), FTSE 100 (FTSE), Hang Seng (HSI), Shanghai Composite Index (SSE), Nikkei 225 (N225), Singapore Straits Times (STI), Korea Composite Stock Price Index (KOSPI), and Net Foreign Flow ratio simultaneously have significant effect on Jakarta Composite Index (JCI), while partially only STI, KOSPI, and Net Foreign Flow that shows significant effect on Jakarta Composite Index (JCI). The results indicated that Indonesia Stock Market is still influenced by foreign sentiment, therefore investors still have to be careful in making investment strategies, one of which is by paying attention to the price movement of Major World Indices and the purchase value ratio of Net Foreign Flow. In addition, the regulator must play a role in rectifying this inaccurate market valuation caused by foreign sentiment.