Tariff War Eases, Positive Sentiment for IHSG ?

KONTAN.CO.ID – JAKARTA. The tension of the United States (US) vs China tariff war in the last 2 months now appears to be easing, after both countries agreed to lower import tariffs. The US, which previously unilaterally set high trade tariffs on its trading partner countries, is now showing a softer stance.

The US's relaxed stance came after intensive negotiations held in Geneva, Switzerland for 2 days on Saturday and Sunday (10-11/05/2025). In the agreement, the US agreed to reduce tariffs on imported products from China by 145% to 30%. And while China also lowered tariffs for various products from the US to 10% from the previous 125%.

Farash Farich, Chief Investment Officer of BNI Asset Management, predicts that the easing of the US-China trade war tensions will have a positive impact on the world capital market, including the IHSG, which has the potential to improve and continue strengthening since its lowest point this year in early April. The Indonesian stock market was seen strengthening yesterday, reflected in the strengthening of the JCI to the level of 6,948.9 led by the Infrastructure sector, the energy and transportation sector and the negative sector was in the technology sector.

"The US and China trade tariff agreement provides positive sentiment for investors, although it is not a final settlement," said Farash in a press release, Thursday (15/5). As conveyed by Scott Bessent, US Treasury Secretary, this is a pause to prevent the impact of long-term damage due to the trade war, because a full agreement may take 2-3 years as happened in the previous US-China Trade War experience.

Farash added that the agreement shows that the US and Chinese governments are being more pragmatic than their previous attitudes in early April 2025. The governments of both countries are now more responsive to concerns about the economic impact of tariff increases that could increase the risk of slowing economic growth in both countries and globally.

Thus, this temporary trade war agreement still provides positive sentiment for the market. The Indonesian stock market is in a position to benefit from this development where the IHSG valuation, based on the price-to-earning ratio, is still below minus 1-standard deviation compared to its historical average and lower than the historical average of the valuation of developing countries' stock markets in Asia. In addition, the portion of foreign ownership in our stock market is the lowest in the last 10 years.

For investors with long-term investment needs and high risk appetite, they can consider the BNI-AM IDX-Pefindo Prime Bank Stock Index Mutual Fund to take advantage of the strengthening stock market. In addition, it is supported by an attractive valuation where the price-to-book ratio is also below its historical average and in the first quarter of 2025, the big banks' net profit is aligned with market expectations.

Meanwhile, investors with short-term and medium-term investment needs and lower to moderate risk appetite can consider the BNI-AM Dana Likuid Money Market Mutual Fund and the BNI-AM Teakwood Fixed Income Mutual Fund with short-duration corporate bond underlying to maintain the principal value of their investment and the investment results of both mutual funds obtained in the short term can be gradually allocated a little to invest in stock mutual funds to provide additional investment results. In addition, the BNI-AM Quality Long Duration Fund with long-term government bond underlying can be considered if there is a correction in the bond market that causes the 10-year bond yield to be around 7% or more.