Tariff War Eases, Positive Sentiment for IHSG?

JAKARTA, Investortrust.id - The tension of the United States (US) vs China tariff war that has colored the media in the past two months now seems to be easing, after both countries agreed to lower import tariffs.

The US, which previously set high trade tariffs unilaterally for its trading partner countries, is now showing a softer stance after going through intensive negotiations held in Geneva - Switzerland, for 2 days on April 10-11, 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 US-China trade war tensions will have a positive impact on global capital markets including the JCI 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 this morning, reflected in the strengthening of the JCI to the level of 6,948.9 led by the Infrastructure sector, the energy and transportation sectors and the negative sector was in the technology sector.

"The US-China trade tariff agreement provides positive sentiment for investors, although it is not a final settlement. As stated by Scott Bessent, US Treasury Secretary, this is a pause to prevent long-term damage from the trade war, because a full agreement may take 2-3 years as happened in the previous US-China Trade War experience," said Farash, Wednesday (5/14/2025).

Farash added that this agreement shows that the US-China Government is currently more pragmatic than the previous attitude 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 country stock markets in Asia. In addition, the portion of foreign ownership in our stock market is the lowest in the last 10 years," said Farash.

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 of the stock market. In addition, it is supported by attractive valuations, with a price-to-book ratio also below its historical average and in the first quarter of 2025. Meanwhile, the net profit of big banks is aligned with market expectations.

Meanwhile, investors with short-term and medium-term investment needs and a 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 underlying short-duration corporate bonds to maintain the principal value of their investments 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 underlying long-term government bonds can be considered if there is a correction in the bond market which causes bond yields The 10-year is around 7% or so.