Why Indonesia’s Energy Stocks Are Sensitive to Economic Changes
The IDXENERGY index represents companies operating in energy-related products and services on the Indonesia Stock Exchange (IDX). Its constituents include businesses involved in coal, oil and gas, alternative energy, and energy-support services.
Because these companies are closely connected to commodity markets, their stock performance can be affected by broader economic conditions as well as changes in energy prices. During 2021–2025, IDXENERGY generally showed an upward trend, but its movement occurred alongside changes in inflation, exchange rates, interest rates, global oil prices, and coal prices.
Previous research has produced mixed conclusions about how these factors affect energy stocks. Mahardhika and Taufiq therefore examined the variables together and distinguished between their short-term and long-term effects.
Five Years of Monthly Market Data
The researchers analyzed 59 monthly observations covering February 2021 to December 2025. IDXENERGY was treated as the main indicator of energy-sector stock performance, while the explanatory factors were inflation, the USD/IDR exchange rate, the BI 7-Day Repo Rate, West Texas Intermediate (WTI) crude oil prices, and the Benchmark Coal Price (HBA).
The data came from publications and databases associated with Bank Indonesia, the Indonesia Stock Exchange, Indonesia’s Ministry of Energy and Mineral Resources, and Investing.com. The researchers used the Vector Error Correction Model (VECM) to identify relationships that emerge both immediately and over longer periods.
Before estimating the model, the researchers tested whether the data were suitable for analysis and found evidence of a long-term equilibrium relationship among the variables. The Johansen cointegration test identified three cointegration vectors, supporting the use of VECM.
Inflation Matters More Over the Long Term
Inflation did not have a statistically significant effect on IDXENERGY in the short term. Its influence became significant over the long term, with a t-statistic of 3.94890, exceeding the study’s critical value of 2.0057.
The researchers explain that energy companies may initially be able to adjust operating costs and selling prices when inflation changes. Over time, however, persistent inflation can become reflected in corporate performance and investor expectations.
For investors, this means inflation may be more relevant when evaluating the longer-term outlook of energy-sector stocks rather than reacting to every short-term inflation movement.
Rupiah Exchange Rate Shows No Significant Effect
The USD/IDR exchange rate produced a different result. According to Mahardhika and Taufiq, exchange-rate movements did not have a statistically significant effect on IDXENERGY either in the short term or long term.
The long-term t-statistic was -1.94346, below the critical value of 2.0057. The researchers suggest that the characteristics of energy companies may help explain the finding, particularly because some energy-sector businesses generate revenue in US dollars. As a result, fluctuations in the rupiah may have a more limited direct effect on their overall performance.
Interest Rates Affect Energy Stocks With a Delay
The BI 7-Day Repo Rate was significant in both time horizons, although its short-term effect did not appear immediately.
In the short term, the interest rate became significant at the fifth lag, with a t-statistic of -2.46034. This indicates that investors did not immediately incorporate changes in the benchmark rate into IDXENERGY. Instead, the response became statistically significant after several periods.
Over the long term, the BI 7-Day Repo Rate also had a significant effect, with a t-statistic of 2.66408. The result highlights monetary policy as an important factor when assessing the longer-term movement of Indonesia’s energy-sector stocks.
Global Oil Prices Have a Negative Long-Term Relationship
Global oil prices significantly affected IDXENERGY in the long term, but the relationship was negative. The estimated coefficient was -1.734900, with a t-statistic of -7.04388.
The finding suggests that sustained increases in global oil prices may be associated with declining IDXENERGY performance over the long term. The researchers link this possibility to higher operating costs, pressure on profitability, and greater economic uncertainty.
However, global oil prices did not have a significant short-term effect. The market and companies may require time to adjust to changes in oil prices before their consequences become visible in stock valuations.
Coal Prices Support IDXENERGY in the Short Term
The Benchmark Coal Price (HBA) showed almost the opposite pattern. HBA did not significantly influence IDXENERGY in the long term, but it had a positive and significant short-term effect at the fourth and fifth lags.
At the fourth lag, HBA recorded a coefficient of 0.415535 and a t-statistic of 2.82469. At the fifth lag, the coefficient was 0.351414, with a t-statistic of 2.62012. These results indicate that changes in coal prices may take roughly four to five periods before their effects become significant in the energy-sector index.
The variance-decomposition analysis also found that the USD/IDR exchange rate contributed the largest share among the external variables to IDXENERGY variation by the tenth observation period, reaching 16.17514%. HBA made the smallest contribution, at approximately 1.56%.
What the Findings Mean for Investors and Policymakers
The results suggest that investors should not rely on a single economic indicator when evaluating Indonesia’s energy-sector stocks.
For long-term investment decisions, inflation, the BI 7-Day Repo Rate, and global oil prices deserve particular attention. For short-term decisions, changes in HBA may provide useful information because their influence appears after a measurable time lag.
The findings also have implications for policymakers. According to the analysis by Mahardhika and Taufiq of Universitas Pembangunan Nasional “Veteran” Jawa Timur, inflation management, interest-rate policy, and monitoring global energy prices can be important considerations for maintaining economic and market stability.
The researchers recommend that future studies use longer observation periods, include additional macroeconomic and external variables, and compare VECM findings with other analytical approaches such as ARDL, NARDL, or Structural VAR.
Author Profile
Muhamad Guntur Mahardhika — Universitas Pembangunan Nasional “Veteran” Jawa Timur. Mahardhika is listed as the corresponding author of the article.
M. Taufiq — Universitas Pembangunan Nasional “Veteran” Jawa Timur. Both authors examine the relationship between macroeconomic conditions, energy commodity prices, and Indonesia’s energy-sector stock performance. The published article does not specify the authors’ academic degrees or detailed individual fields of expertise, so those details are not added here.
Research Source
Article: Analysis of The Influence of Macroeconomic Factors: Inflation, Rupiah Exchange Rate, BI 7-Day Repo Rate, World Oil Prices, and Benchmark Coal Prices (HBA) On the Energy Sector Index (IDXENERGY) On the Indonesia Stock Exchange
Authors: Muhamad Guntur Mahardhika and M. Taufiq
Affiliation: Universitas Pembangunan Nasional “Veteran” Jawa Timur
Journal: International Journal of Sustainable Applied Sciences (IJSAS)
Volume: 4, No. 8
Publication Year: 2026
Pages: 865–884
DOI: https://doi.org/10.59890/ijsas.v4i8.43
URL: https://ijsasjournal.my.id/index.php/ijsas
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