Indonesian Stock Market Shows Limited Reaction to MUI Boycott Fatwa on Israeli-Affiliated Companies

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FORMOSA NEWS

Indonesia’s stock market remained largely stable following the issuance of Fatwa Majelis Ulama Indonesia (MUI) No. 83 of 2023, which called on Muslims to boycott products linked to Israel. This conclusion comes from a peer-reviewed study by Farhan Aryo Abimanyu, Umi Widyastuti, and Agung Dharmawan Buchdadi , Universitas Negeri Jakarta, published in 2026 in the International Journal of Finance and Business Management (IJFBM). The research matters because it tests whether strong social and political pressure—widely visible in public discourse and consumer behavior—actually translates into measurable shocks in Indonesia’s capital market.

The study examined how investors responded after the fatwa was announced on 8 November 2023, at a time when public support for Palestine and calls for boycotts of Israeli-affiliated products were highly visible across Indonesia. Several well-known listed companies were named in public discussions, raising concerns that reputational risk and declining consumer demand could spill over into falling stock prices. The findings suggest that, despite public pressure, investors largely stayed calm.

Social Pressure Meets Financial Markets

The MUI fatwa emerged amid escalating conflict in Gaza in late 2023 and growing global support for the Boycott, Divestment, and Sanctions (BDS) movement. In Indonesia, the world’s largest Muslim-majority country, the call resonated strongly with the public. Campaigns encouraging consumers to avoid certain global brands spread rapidly on social media, in mosques, and through community organizations.

Companies frequently mentioned in boycott discussions included PT Fast Food Indonesia Tbk (KFC), PT Sarimelati Kencana Tbk (Pizza Hut), PT Unilever Indonesia Tbk, PT MAP Boga Adiperkasa Tbk (operator of Starbucks and Burger King), PT Mitra Adiperkasa Tbk, and PT Metrodata Electronics Tbk. While some outlets reported declining foot traffic at certain retail locations, it remained unclear whether this translated into losses in market value.

Financial markets often react sharply to geopolitical crises, sanctions, and political instability. Past studies show wars, pandemics, and major policy announcements can trigger sudden stock price swings. This made Indonesia an important test case: would moral and political pressure shape investor behavior?

How the Analysis Was Conducted

The researchers used an event study approach, a standard method in financial analysis to observe how markets react to specific events. Instead of focusing on consumer surveys or company statements, the study tracked daily stock prices of six Israeli-affiliated issuers listed on the Indonesia Stock Exchange (IDX).

Stock price movements were observed over a 25-day window, covering 12 trading days before and 12 trading days after the fatwa announcement. These movements were compared with overall market trends to see whether the stocks behaved unusually during the period.

In simple terms, the researchers asked: did these stocks rise or fall more than expected once the fatwa became public?

Key Findings at a Glance

The results point to a market that absorbed the news without major disruption.

• No significant difference was found in stock price movements before and after the fatwa announcement.
• Average and cumulative returns remained close to normal market patterns.
• A short-lived reaction appeared on the third trading day after the announcement, but it was not sustained.
• Overall stock movements were driven more by general market conditions than by the boycott issue.

In statistical terms, the study found no consistent abnormal price changes that could be attributed directly to the fatwa.

Why the Market Stayed Calm

According to the authors, this pattern reflects the behavior of a relatively efficient market. Public information—such as the MUI fatwa—was quickly digested by investors, who appeared to judge that the potential financial impact would be limited or temporary.

“Investors tend to react strongly to information that directly affects earnings, cash flow, or long-term business prospects,” the authors explain. From a market perspective, the boycott was viewed as a social signal, not a confirmed threat to corporate fundamentals.

Many of the companies involved operate diversified businesses with broad consumer bases and multiple revenue streams. This may have reassured investors that short-term reputational pressure would not necessarily translate into sustained financial losses.

Farhan Aryo Abimanyu of Universitas Negeri Jakarta notes that public outrage and market panic do not always move in tandem. Ethical and political concerns can shape consumer behavior without immediately reshaping investor expectations.

Implications for Investors and Businesses

The findings carry practical lessons for several groups.

For investors, the study highlights the importance of separating emotional headlines from financial fundamentals. Social and political movements may dominate public debate, but markets respond selectively, focusing on measurable risks.

For companies, the research sends a nuanced message. Stock prices may remain stable, but reputational risk still matters. Declining consumer trust, prolonged boycotts, or regulatory changes could eventually affect performance if left unmanaged.

For policymakers and regulators, the results suggest that Indonesia’s capital market showed resilience during a politically sensitive period. Market stability amid intense public debate reflects a level of investor confidence that can support broader economic stability.

Academic Insight

In their analysis, the authors emphasize that the boycott functioned as a signal, not a shock. As Abimanyu and his colleagues write, investors appeared to interpret the fatwa as “information already anticipated by the market, rather than a decisive factor capable of reshaping stock valuations.”

This interpretation aligns with established financial theory that markets adjust quickly to public information and only react strongly when new data alters expectations about future performance.

Author Profiles

Farhan Aryo Abimanyu  Universitas Negeri Jakarta. Umi Widyastuti, Agung Dharmawan Buchdadi, researcher from Universitas Negeri Jakarta.

Source

Journal Article: Market Reaction to the Boycott of Israeli-Affiliated Issuers in Indonesia: An Event Study Approach
Journal: International Journal of Finance and Business Management (IJFBM)
Year: 2026