Macro Economic Analysis
Unlike the case when GDP or GDP in the opposite condition is bearish, many investors wait and see or wait for economic conditions to improve by withdrawing from the stock market so that the stock market is corrected or bearish.
In addition to GDP or GDP, there are other indicators that can be used to monitor a country’s macroeconomic conditions, namely the inflation rate.
You can see the table above, especially in 2008 which showed an increase in the inflation rate of 11.06% with the previous year at 6.59% (2007). When there is an increase in high inflation, the stock market is also corrected high, namely by -50.64%, which is almost the same as the magnitude of the increase in the inflation rate.
In 2008 above the actual inflation or the crisis that occurred was not only experienced by Indonesia but also other countries due to the American subprime mortgage. If you don’t know what the subprime mortgage crisis is, please read the US 2008 subprime mortgage crisis first.
So it can be concluded that the higher the inflation rate, the greater the correction that occurs in the stock market because this will affect government policy in terms of an increase or decrease in interest rates through Bank Indonesia, which then changes in interest rates will affect the size of the company’s burden.
If you want a clearer explanation then you can read it in the influence of inflation on stock prices.
If you also want to know the influence of macroeconomic conditions on the forex market, please also read the macroeconomic indicators of forex trading.
So, the point is that this macroeconomic analysis we use as a reference in deciding whether we will maintain our stock portfolio or sell it. And by knowing the macroeconomic conditions of our country, it will become increasingly clear why our stock portfolio has experienced a correction or price increase.