Stock Market Response to Rising Fuel Prices in 2022

Purpose: The purpose of this study is to test and analyze the differences in abnormal stock returns and trading volume activity before and after the announcement of the fuel price increase on September 3, 2022. The research focuses on companies listed in the LQ45 index, aiming to determine whether the capital market reacted significantly to this policy change. By examining the behavior of stock prices and trading volumes, the study seeks to provide insights into how investors and the broader market respond to macroeconomic events such as fuel price adjustments.

Method: This study employs an event study methodology with an observation period of ten days, consisting of five days before and five days after the announcement of the fuel price hike. The population includes 45 companies listed in the LQ45 index during the period from August 28, 2022, to September 9, 2022. Data analysis was conducted using a paired sample t-test to evaluate differences in abnormal returns and trading volume activity across the two periods. This approach allows for a rigorous comparison of market behavior surrounding the event.

Findings: The findings indicate that there is no significant difference in abnormal stock returns or trading volume activity before and after the announcement of the fuel price increase among companies listed in LQ45. This suggests that the capital market did not exhibit a strong reaction to the event, and both stock prices and trading volumes remained relatively stable despite the policy change.

Implication: The implications of this study highlight that fuel price hikes, while impactful in broader economic contexts, may not necessarily trigger immediate or significant reactions in the capital market. For policymakers, this suggests that investor sentiment in Indonesia’s capital market may be resilient to such adjustments. For investors, the findings provide reassurance that short-term volatility may not always accompany fuel price policy changes.

Originality: The originality of this study lies in its focus on a localized macroeconomic event within the Indonesian context, offering new insights into how emerging markets respond to fuel price policy changes.