The Jakarta Composite Stock Price Index (JCI) strengthened again by 5.5% from the beginning of this week to Thursday (6/3). After experiencing a bearish trend with a significant decline of up to -21% from its peak in mid-September 2024, this news is a breath of fresh air for investors.

With the JCI strengthening that occurred, an important question arises: is this downward trend over? Some people are starting to speculate that we are witnessing a rebound phase that can continue, while on the other hand, some think that JCI may still have the potential to fall again. Let’s explore more deeply based on historical data on JCI movements to provide answers.

Key Findings to Consider

1. Historical Decline Average and Range Similar to Current
Levels Over the past two decades, JCI has experienced eight significant decline events, which we define as a minimum decline of 15%. Of the eight incidents, two of them were caused by major crises, namely the Covid-19 pandemic with a decrease of -38.4% and the Global Financial Crisis which reached -61.6%. If we ignore the two crises, the average decline from the other six events is -21.4%, with the range of declines ranging from 15.8% to 26.9%.

2. Full Rebound
Based on the records, of the eight existing decline events, JCI managed to rebound to the level before the decline occurred, although it required a longer duration than the duration of the decline. In fact, there were five instances where JCI managed to rebound above the level before the decline.

3. Trade War Volume I
Back in 2018, JCI also managed to rise from a decline due to the impact of the trade war with China. This incident has similarities to the conditions we are facing today.

Important to Note

Here are some notes to keep in mind:

• There were two significant declines that were excluded from this analysis, namely in 2005 and 2006, because the JCI at that time was below 2,000 and its relevance was considered less comparable.
• Measurement of decline and recovery can contain subjectivity based on chart observation.
• There is no certainty that the current downturn will not continue into a crisis with a huge downturn, as it has in the past.

Conclusion: If you are an investor who sees this condition as not a crisis and the possibility of future crises is not great, history shows that the current JCI decline is nearing its end and has the potential to be followed by a significant rebound.