"Ah, the magical powers of political figures!" Bagong quipped. "When members of DPR Indonesia graced the Indonesia Stock Exchange (IDX) with their presence, it seemed like the mere act of walking through those hallowed halls sent the stock market into a frenzy of optimism—turning it "green" in no time. One might wonder if he brought a magic wand or a secret potion for economic prosperity! It’s almost as if the market was waiting for a politician to show up and sprinkle some fairy dust. Investors, who typically analyze complex data and trends, suddenly found themselves buoyed by the mere sight of a politician. Forget about economic indicators or corporate earnings reports; all it took was a visit from Mister DPR to make everyone feel giddy about their investments.
Of course, this raises some questions. Are we to believe that the market's fate hangs on the whims of political visits? Should we all start lining up at the IDX every time a politician decides to drop by? Perhaps we should consider hiring politicians as full-time market motivators—after all, who needs analysts when you have a charismatic deputy speaker?
In reality, while such visits might create temporary excitement or optimism in the market, they are often just that—temporary. The underlying economic fundamentals remain unchanged, and investors should remember that true market health is built on solid foundations rather than fleeting political appearances.
The term 'market' refers to a place or system where buyers and sellers engage in the exchange of goods, services, or financial instruments. Markets can be physical (such as traditional marketplaces and retail stores) or virtual (like e-commerce platforms and stock exchanges). Markets operate based on the principles of supply and demand, price mechanisms, and consumer behaviour.
The terms 'market' and 'exchange' (bursa) are related but have distinct meanings. A market is a broad concept that refers to any system, place, or platform where buyers and sellers trade goods, services, or financial assets. Markets can be: Physical (e.g., traditional markets, supermarkets, shopping malls); Virtual (e.g., e-commerce platforms, online stock trading); Financial (e.g., forex market, bond market).
Markets operate based on supply and demand, competition, and economic forces. They can be structured or unstructured, and transactions may occur directly between buyers and sellers.
An exchange is a specialized, regulated market where financial instruments like stocks, bonds, commodities, and derivatives are bought and sold. Examples include: Stock Exchanges (e.g., New York Stock Exchange, Bursa Malaysia, IDX - Indonesia Stock Exchange); Commodities Exchanges (e.g., Chicago Mercantile Exchange, London Metal Exchange); Cryptocurrency Exchanges (e.g., Binance, Coinbase).
Exchanges have strict regulations and are managed by governing bodies to ensure transparency, security, and fair trading practices. Unlike general markets, exchanges require participants (buyers and sellers) to follow specific rules and often involve intermediaries like brokers.
The term "market reaction" commonly mentioned in the news usually refers to financial markets, especially stock exchanges, bond markets, or foreign exchange (forex) markets, responding to an event, policy, or economic news.
Market reaction happens when market participants—such as investors, traders, and financial institutions—adjust their decisions based on Economic news (e.g., inflation rates, GDP growth, interest rates); Government or central bank policies (e.g., Federal Reserve or Bank Indonesia raising interest rates); Global crises or events (e.g., war, pandemics, major corporate bankruptcies); Company earnings reports (e.g., Apple or Tesla announcing profits or losses).
Does 'market reaction' refer to the general market or just the stock exchange?
In financial news, this term most often refers to the stock market, but it can also include the bond market, forex market, or commodity markets. If a news report mentions stock prices rising or falling after an announcement, it refers to stock exchange movements. However, if it talks about changes in gold prices, oil prices, or currency exchange rates, it refers to the broader financial market reaction. Examples in News Reports:
"Market reaction to the Federal Reserve's interest rate hike: Dow Jones index drops 2% in one day." (refers to stock exchange)
"Gold prices surge as global economic uncertainty increases." (refers to commodity market)
"The Indonesian rupiah weakens against the US dollar after US inflation data release." (refers to forex market)
Markets are dynamic and influenced by various factors that determine how the prices of goods, services, or financial assets fluctuate. These factors can be divided into general factors affecting all markets and specific factors that impact financial markets.
General factors affecting Markets are Supply and Demand (when demand exceeds supply, prices rise; when supply is greater than demand, prices fall); Economic Conditions (economic growth, unemployment rates, and inflation affect purchasing power and business activity); Government Policies (taxes, trade regulations, and subsidies can impact prices and product availability); Political and Social Stability (conflicts, protests, or controversial government policies can affect economic activity and trade); Technological Developments (innovations can create new products or improve production efficiency, affecting competition and pricing); Weather and Natural Factors (natural disasters, climate change, or extreme weather conditions can impact commodity production, such as food and energy).
In addition to the mentioned, financial markets (such as stock exchanges, bond markets, and forex markets) are influenced by additional factors: Monetary Policy and Interest Rates (when central banks raise interest rates, stock investments may decline due to higher borrowing costs, while bonds may become more attractive); Economic Data and Market Sentiment (indicators like GDP, unemployment rates, and inflation influence investor confidence and asset price movements); Currency Exchange Rates (depreciation or appreciation of a currency affects export competitiveness and the profitability of multinational companies); Commodity Prices (stock and bond markets can be affected by fluctuations in oil, gold, and raw material prices); Global Events and Geopolitics (wars, trade conflicts, and foreign policies of major countries can cause volatility in financial markets); Speculation and Investor Psychology (investor expectations and speculative actions often lead to price surges or crashes in stocks and other assets).
In general, both markets and financial markets share some influencing factors, but financial markets are more affected by interest rates, monetary policy, currency exchange rates, and investor sentiment, which do not always directly impact the market for goods and services.
Throughout history, markets and financial systems have faced devastating collapses, often triggered by a combination of speculation, economic imbalances, financial mismanagement, and unexpected external shocks. One of the earliest and most infamous crashes occurred in 1929, known as the Wall Street Crash. In the years leading up to it, stock prices soared due to excessive speculation, with many investors buying stocks on margin—essentially borrowing money to invest. The optimism was short-lived. When confidence wavered, panic set in, and a massive sell-off began. The market collapsed, leading to the Great Depression, a prolonged period of economic hardship that affected not just the United States but the entire world. Factories shut down, banks failed, and unemployment skyrocketed, leaving millions in poverty.
Decades later, in 1987, another catastrophic event occurred, now known as Black Monday. Unlike 1929, this crash was largely driven by the increasing use of computerized trading. As stock prices began to fall, automated sell orders flooded the market, exacerbating the decline. Within a single day, the Dow Jones Industrial Average plummeted by more than 22%, sending shockwaves through global financial markets. Though the economy recovered faster than expected, Black Monday demonstrated the dangers of high-frequency trading and the fragile nature of investor confidence.
The early 2000s witnessed yet another financial disaster—the bursting of the dot-com bubble. In the late 1990s, investors poured money into internet-based companies, believing that the digital revolution would bring endless profits. Many of these companies had no sustainable business models or even actual profits, yet their stock prices soared. Eventually, reality struck. When investors realized that these companies were not generating returns, a massive sell-off occurred, causing tech stocks to plummet. The Nasdaq, which had reached record highs, lost nearly 80% of its value. Startups collapsed overnight, and billions of dollars in investments vanished.
Perhaps the most devastating modern financial collapse came in 2008, triggered by the subprime mortgage crisis in the United States. For years, banks had been issuing risky home loans to borrowers with poor credit, packaging these loans into complex financial instruments, and selling them to investors. The illusion of stability was shattered when homeowners began defaulting on their loans, leading to a chain reaction that toppled major financial institutions. Lehman Brothers, one of the largest investment banks, collapsed, sending the global economy into a downward spiral. Governments worldwide scrambled to implement emergency bailouts and stimulus measures, but the damage was severe—millions lost their homes and jobs, and economies took years to recover.
The most recent market collapse occurred in early 2020 when the COVID-19 pandemic swept across the globe. As lockdowns and restrictions were imposed, economic activity ground to a halt. Investors panicked, leading to an unprecedented market crash in February and March. The oil market also suffered a massive blow, as travel bans and reduced industrial activity led to an oversupply of crude oil, causing prices to plummet. However, unlike previous crises, the COVID-19 crash saw a rapid recovery, fueled by aggressive government interventions, stimulus packages, and the development of vaccines that restored confidence in the economy.
Market crashes, though devastating, are an inevitable part of economic cycles. They serve as harsh lessons on the consequences of speculation, mismanagement, and overconfidence. While financial regulations and safeguards have improved over time, history has shown that no system is immune to collapse, and vigilance is always necessary to prevent future crises.
When a country’s financial markets are controlled by the military, police forces, or a small group of oligarchs, its economic landscape often becomes unpredictable, fragile, and deeply mistrusted by the global community. Such control usually results in a system where economic policies serve the interests of those in power rather than fostering fair competition, innovation, or sustainable growth. Investors, both domestic and international, tend to see these markets as high-risk due to the lack of transparency, political instability, and the absence of legal protections for businesses.
Markets, in all their forms—whether financial, goods, labor, or digital markets—thrive on healthy competition and innovation because these elements drive efficiency, improve quality, and create opportunities for sustainable growth. When competition is fair, businesses are pushed to offer better products, lower prices, and enhanced services. This benefits consumers, who gain access to a wider variety of choices at more affordable costs. A lack of competition, on the other hand, often leads to stagnation, monopolistic control, and inefficiencies that ultimately harm both businesses and consumers.
Innovation plays an equally crucial role. It ensures that industries continue evolving, adapting to new challenges, and improving productivity. Companies that invest in research and development create groundbreaking solutions, whether in technology, healthcare, or manufacturing. Without innovation, markets become rigid, unable to keep pace with the changing demands of consumers or the global economy. This is why competitive markets tend to be the most resilient—they attract talent, encourage investments, and sustain long-term economic progress.
Consider the global technology industry as an example. In countries where competition thrives, firms such as Apple, Google, and Samsung continuously push the boundaries of innovation, leading to advanced smartphones, artificial intelligence, and new computing capabilities. These companies would not have achieved such progress if they operated in an environment without competition, where mediocrity could thrive unchecked.
On the other hand, in economies where competition is stifled—whether due to government interference, monopolistic practices, or restrictive policies—markets tend to stagnate. Products remain outdated, prices stay high, and consumer choices become limited. For instance, in regions where only a single state-owned company provides internet services, consumers often face slow speeds and high costs because there is no pressure to improve efficiency or offer better services.
In financial markets, competition ensures fair pricing and access to capital. If only a few powerful entities dominate the financial sector, borrowing costs rise, investment opportunities shrink, and economic inequality deepens. A dynamic financial market, fueled by competition and innovation, enables businesses to grow, create jobs, and drive economic development.
Ultimately, healthy competition and innovation benefit societies as a whole. They encourage businesses to remain adaptable, governments to enforce fair regulations, and consumers to receive the best possible products and services. Without these elements, markets become inefficient, leading to economic stagnation and, in extreme cases, crises that harm long-term prosperity.
So once more, the extent of financial mismanagement, corruption, and 'repression' in these regimes often determines how severely the economy is impacted.
One of the clearest examples of a military-controlled economy is Myanmar. Since the military coup in 2021, Myanmar’s financial system has been in turmoil. The banking sector collapsed due to a loss of confidence, inflation soared, and foreign businesses fled the country. International sanctions further isolated the economy, cutting off access to global financial markets. The presence of an authoritarian military government has made Myanmar an unattractive destination for investors, and capital flight continues to drain its economic resources.
Another example can be found in Venezuela, where a combination of oligarchic control and military influence over key industries has devastated the economy. The government, backed by military elites and a small circle of powerful businessmen, has nationalized major industries, including oil production. However, mismanagement, corruption, and economic miscalculations have led to hyperinflation, food shortages, and the collapse of the bolívar, Venezuela’s currency. Despite having the world’s largest oil reserves, Venezuela has struggled to maintain a stable financial system, and international investors largely avoid the country due to the risk of expropriation and the lack of legal protections.
In other cases, such as Russia, a powerful oligarchic system dictates much of the country’s financial direction. While Russia remains integrated into global financial markets to some extent, its economy has suffered from Western sanctions and the excessive influence of oligarchs who control key sectors like energy, media, and banking. This has resulted in an economy that, while resource-rich, remains highly dependent on political decisions rather than market-driven forces. The consequences have been capital outflows, reduced foreign investment, and an increased reliance on state-controlled financial mechanisms.
Countries where the military or oligarchs dominate financial markets often experience distrust from the international community. Investors hesitate to engage in economies where legal and regulatory frameworks are weak, where corruption dictates business success, and where political instability can lead to sudden economic downturns. Global credit agencies often downgrade such countries, making it more expensive for them to borrow money. Trade agreements and economic partnerships become more difficult to negotiate, and their currencies often experience volatility.
The overall effect is that these economies stagnate, failing to attract the capital and innovation needed for long-term growth. Instead of encouraging economic prosperity for their citizens, these governments prioritize the wealth and power of a small elite, leading to rising inequality, poor economic performance, and increasing social unrest.
I express this not out of resentment toward the esteemed soldiers and officers, but simply because it is the undeniable truth. This is precisely why, in several Western countries, veterans—especially those who have served in the military—are held in high regard. Beyond their willingness to sacrifice their lives, they also risk the limitations of their careers in service to their nation.
In many countries, the military and police are deeply respected due to their role in maintaining national security, enforcing law and order, and protecting citizens from threats. The level of respect often depends on historical context, cultural values, and how these institutions interact with the public.
One of the clearest examples is the United States, where the military is highly honored, especially among veterans. This respect is rooted in the country's long history of military service, its role in defending freedom, and its involvement in global conflicts. Soldiers are often seen as heroes, and the country dedicates national holidays such as Veterans Day and Memorial Day to honor their sacrifices. The police, however, receive mixed respect depending on the region and historical events, particularly due to concerns over law enforcement practices.
Another country where the military enjoys significant respect is Israel. Given its geopolitical situation and mandatory military service, the Israel Defense Forces (IDF) are viewed as a pillar of national survival. Almost every Israeli citizen serves in the military at some point, creating a deep connection between the army and society. As a result, soldiers are widely honored, and military service is seen as a duty and a privilege.
In Japan, respect for both the police and the Self-Defense Forces is deeply ingrained in society. The Japanese police are known for their efficiency, discipline, and low corruption levels, making them highly trusted by the public. Meanwhile, although Japan's post-war constitution limits its military operations, the Self-Defense Forces are respected for their role in humanitarian missions, disaster relief, and national security.
South Korea also holds high regard for its military, largely due to the ongoing tension with North Korea. With mandatory conscription, most South Korean men experience military service, creating a national culture that values soldiers. The police are also well-respected for maintaining order in a highly urbanized and fast-paced society.
In China, the People’s Liberation Army (PLA) is regarded as a symbol of national strength. Due to government propaganda and the historical role of the PLA in China’s rise as a global power, the military is widely honored. The police, while respected, are sometimes viewed with suspicion due to their role in enforcing strict governmental policies.
In contrast, some countries—especially those with histories of military dictatorship or police brutality—have populations that are less trusting of these institutions. Public perception is highly influenced by how the military and police conduct themselves, whether they serve the people or suppress them," Bagong closed the discussion.
Then Bagong took up his guitar, strumming softly as Gareng sang a melody born of Ebiet’s tune, Apakah ada bedanya? (Is there truly a difference?),
Di bumi yang berputar,
[Upon this ever-turning earth]
Pasti ada gejolak,
[Waves of turmoil rise and fall]
Ikuti saja iramanya,
[Just follow the rhythm]
Isi dengan rasa
[Fill it with taste]
