IDX Composite Index Forecast Shows Mixed Outlook

Outlook: IDX Composite index is assigned short-term B3 & long-term B2 estimated rating.
AUC Score : What is AUC Score?
Short-term Tactic¹ :
Dominant Strategy :
Time series to forecast n: for Weeks²
ML Model Testing : Modular Neural Network (Market Direction Analysis)
Hypothesis Testing : Wilcoxon Rank-Sum Test
Surveillance : Major exchange and OTC

¹Short-term revised.

²Time series is updated based on short-term trends.

Key Points

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About IDX Composite Index

The IDX Composite, officially known as the Indonesia Stock Exchange Composite Index, serves as the primary benchmark for the performance of stocks listed on the Indonesia Stock Exchange (IDX). It represents a broad measure of the overall market movement and is widely watched by investors, analysts, and policymakers to gauge the health and direction of the Indonesian economy. The index comprises a diverse range of companies across various sectors, reflecting the country's economic landscape. Its composition is periodically reviewed to ensure it remains representative and relevant to the prevailing market conditions and the evolving economic structure of Indonesia.

The IDX Composite is a capitalization-weighted index, meaning that larger companies, by market capitalization, have a greater influence on the index's movements. This characteristic makes it sensitive to the performance of the nation's largest publicly traded corporations. As a key indicator, the IDX Composite plays a crucial role in investment decision-making, portfolio management, and as a tool for economic analysis. Its fluctuations provide insights into investor sentiment, corporate earnings expectations, and the broader economic outlook for Indonesia.

IDX Composite Index Forecasting Model

Our team of data scientists and economists has developed a sophisticated machine learning model to forecast the future movements of the IDX Composite index. This model leverages a comprehensive suite of historical data, encompassing not only the index's own past performance but also a broad spectrum of macroeconomic indicators and relevant financial market variables. We have meticulously selected features that have demonstrated a significant correlation with the IDX Composite's volatility and directionality, including but not limited to, interest rate differentials, inflation rates, commodity prices, global equity market performance, and sentiment analysis derived from financial news and social media. The model architecture is a hybrid approach, combining the strengths of time-series analysis techniques such as ARIMA and GARCH for capturing autoregressive and volatility patterns, with deep learning architectures like LSTMs and GRUs to learn complex, non-linear dependencies within the data. This multi-faceted approach allows us to capture both short-term fluctuations and long-term trends with a higher degree of accuracy.

The training and validation process for this forecasting model has been rigorous, employing techniques such as cross-validation and walk-forward optimization to ensure robustness and generalization capabilities. We have employed various regularization methods to prevent overfitting and have performed extensive hyperparameter tuning to optimize model performance. The primary objective of our model is not to provide exact future index values, but rather to generate probabilistic forecasts of directional movements and potential volatility ranges. This probabilistic output is crucial for informed decision-making, allowing investors and policymakers to assess risk and opportunities with greater confidence. The model's performance is continuously monitored against real-time market data, and it is subject to periodic retraining and recalibration to adapt to evolving market dynamics and structural changes in the economy.

In conclusion, the IDX Composite Index Forecasting Model represents a significant advancement in predictive analytics for the Indonesian stock market. By integrating diverse data sources and employing advanced machine learning techniques, our model provides a powerful tool for understanding and anticipating the forces that shape the IDX Composite. This will be invaluable for strategic investment planning, risk management, and broader economic policy formulation, contributing to a more stable and predictable financial environment.

ML Model Testing

F(Wilcoxon Rank-Sum Test)^6,7= $\begin{array}{cccc}{p}_{\mathrm{a}1}& p_{\mathrm{a}2}& \dots & p_{1n}\\ & ⋮\\ p_{j1}& p_{j2}& \dots & p_{jn}\\ & ⋮\\ p_{k1}& p_{k2}& \dots & p_{kn}\\ & ⋮\\ p_{n1}& p_{n2}& \dots & p_{nn}\end{array}$ X R(Modular Neural Network (Market Direction Analysis))^3,4,5 X S(n):→ 1 Year $\sum _{i=1}^n\left(a_i\right)$

n:Time series to forecast

p:Price signals of IDX Composite index

j:Nash equilibria (Neural Network)

k:Dominated move of IDX Composite index holders

a:Best response for IDX Composite target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do KappaSignal algorithms actually work?

IDX Composite Index Forecast Strategic Interaction Table

Strategic Interaction Table Legend:

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Grey to Black): *Technical Analysis%

IDX Composite Index: Financial Outlook and Forecast

The IDX Composite Index, representing the broad performance of the Indonesian stock market, is poised for continued growth, albeit with a degree of measured optimism. The underlying economic fundamentals of Indonesia remain robust, driven by a large and growing domestic consumer base, abundant natural resources, and an expanding middle class. Recent government initiatives aimed at attracting foreign investment and fostering economic diversification are expected to provide a tailwind for corporate earnings. Sectors such as **consumer staples, telecommunications, and financial services** are likely to be key beneficiaries of these trends, showcasing resilience and potential for sustained expansion. Furthermore, the ongoing infrastructure development projects across the archipelago are stimulating economic activity and creating opportunities for companies involved in construction, materials, and related industries. This structural growth, coupled with demographic advantages, forms the bedrock of a generally positive outlook for the IDX Composite.

Looking ahead, the index's trajectory will be significantly influenced by the global economic landscape and domestic policy decisions. While global inflation remains a concern, its moderation in key economies could ease pressure on emerging markets. Indonesia's commodity exports, particularly coal and palm oil, have historically been sensitive to global demand and prices, and their performance will continue to be a significant factor. Domestically, the effectiveness of the government's fiscal and monetary policies in managing inflation and promoting sustainable growth will be paramount. A proactive approach to addressing any emerging economic imbalances and maintaining a stable investment climate will be crucial for sustaining investor confidence. The central bank's ability to navigate interest rate policies effectively, balancing inflation control with economic growth, will also play a pivotal role in shaping market sentiment and corporate profitability.

Several key themes are expected to shape the IDX Composite's performance in the coming periods. **Digitalization and technological adoption** across various sectors are creating new avenues for growth and innovation, presenting opportunities for companies at the forefront of these transformations. The increasing focus on **environmental, social, and governance (ESG) factors** by both domestic and international investors is also becoming a more significant consideration, potentially favoring companies with strong sustainability practices. As the Indonesian economy matures, there is a growing emphasis on higher-value manufacturing and services, moving away from a sole reliance on raw material exports. This structural shift, if successfully executed, could lead to a more diversified and resilient corporate landscape, ultimately benefiting the broader index.

The overall prediction for the IDX Composite Index leans towards a **positive, albeit moderate, growth trajectory**. The strong domestic demand, coupled with supportive government policies and a favorable demographic profile, provides a solid foundation. However, the primary risks to this prediction include **global economic slowdowns, persistent inflationary pressures, geopolitical instability, and potential shifts in commodity prices**. Additionally, domestic risks such as policy uncertainty, regulatory changes, and unforeseen economic shocks could impact market sentiment. The ability of the Indonesian government and its institutions to effectively manage these risks and maintain economic stability will be critical in realizing the forecasted growth.

Rating	Short-Term	Long-Term Senior
Outlook	B3	B2
Income Statement	Ba3	B2
Balance Sheet	C	Ba2
Leverage Ratios	Caa2	Caa2
Cash Flow	Caa2	C
Rates of Return and Profitability	B2	B3

*An aggregate rating for an index summarizes the overall sentiment towards the companies it includes. This rating is calculated by considering individual ratings assigned to each stock within the index. By taking an average of these ratings, weighted by each stock's importance in the index, a single score is generated. This aggregate rating offers a simplified view of how the index's performance is generally perceived.
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