Comparative Analysis of Bullish and Bearish Stock Performance Before and After Trading Halt of LQ45 Stocks on the Indonesia Stock Exchange

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FORMOSA NEWS - Manado - Trading Halt Policy Shows Limited Impact on LQ45 Stock Returns During Market Volatility. A 2026 study by Jordan Jastrib Janis, Joubert B. Maramis, and Ferdinand J. Tumewu from Sam Ratulangi University finds that trading halts on Indonesia’s stock exchange do not significantly affect stock returns but can influence trading activity during bullish markets. Published in the Formosa Journal of Applied Sciences, the research analyzes LQ45 stocks before and after trading halts during the COVID-19 crisis offering important insights for regulators and investors navigating volatile markets. The findings matter because trading halts are one of the most visible tools used by stock exchanges to stabilize markets during sharp downturns. Understanding whether these interventions actually change investor behavior or market outcomes is critical for shaping future financial policies in Indonesia and beyond.

Why Trading Halts Matter in Modern Markets
Financial markets are highly sensitive to uncertainty, especially during crises such as the COVID-19 pandemic. Rapid price swings can trigger panic selling or irrational investment decisions, disrupting market efficiency. To address this, stock exchanges including the Indonesia Stock Exchange (IDX) implement trading halts, temporarily pausing trading when market declines exceed certain thresholds. The goal is simple: give investors time to process information and reduce emotional reactions. However, whether trading halts truly stabilize markets or simply delay volatility remains an open question. The Universitas Sam Ratulangi research provides empirical evidence by examining how investors respond under different market conditions bullish (rising) and bearish (falling).

Simple Approach to Measuring Market Reaction
The research team applied an event-based analysis using historical data from LQ45 stocks, a group representing Indonesia’s most liquid and large-cap companies. These stocks are widely considered a benchmark for overall market performance.
Instead of complex modeling, the study focused on two practical indicators:

• Abnormal return, which captures unexpected gains or losses beyond normal market performance
• Trading volume activity (TVA), which reflects how actively investors buy and sell shares

The researchers compared these indicators in short periods before and after trading halts during the early stages of the COVID-19 pandemic. Statistical testing was used to determine whether any observed differences were meaningful.

Key Findings: Price Stability, Behavioral Shifts
The results show a clear pattern: trading halts do not significantly change stock returns but do affect investor activity under certain conditions.
Main findings include:

No significant change in stock returns

• In both bullish and bearish markets, abnormal returns remained statistically unchanged after trading halts.
• Significance levels were 0.583 (bullish) and 0.929 (bearish), indicating no meaningful difference.

Increased trading activity in bullish markets

• Trading volume changed significantly after trading halts when the market was rising
• Investors became more active once trading resumed, suggesting delayed decision-making.

Minimal impact in bearish markets

• In declining markets, trading volume did not change significantly.
• Investors tended to remain cautious and reduce participation.

These findings suggest that trading halts influence how investors trade, but not how much they earn.

Implications for Policy and Investment Strategy
The study offers several practical insights for regulators, investors, and financial institutions. For regulators such as the Indonesia Stock Exchange, trading halts appear effective as a stabilization mechanism, helping to pause extreme volatility without distorting price formation. However, they should not be expected to directly influence stock returns. “Trading halt has not fully generated a significant market response in the short term,”  For investors, the findings reinforce the importance of fundamentals. Trading halts should not be interpreted as signals to buy or sell. Instead, investors should focus on broader economic conditions, company performance, and risk management. In bullish conditions, increased trading activity after a halt may signal renewed market momentum. In bearish conditions, continued low activity reflects persistent uncertainty.

Author Profiles

Jordan Jastrib Janis – Researcher at Universitas Sam Ratulangi, specializing in capital market analysis and financial data interpretation.

Joubert B. Maramis – Lecturer at Universitas Sam Ratulangi, expert in financial management and investment strategy.

Ferdinand J. Tumewu – Academic at Universitas Sam Ratulangi, focusing on capital markets and investor behavior.

Source
Janis, J. J., Maramis, J. B., & Tumewu, F. J. (2026). Comparative Analysis of Bullish and Bearish Stock Performance Before and After Trading Halt of LQ45 Stocks on the Indonesia Stock Exchange. Formosa Journal of Applied Sciences, Vol. 5, No. 2, Hal 759–778.
DOI: https://doi.org/10.55927/fjas.v5i2.10
URL: https://journalfjas.my.id/index.php/fjas