Definition of JCI: Composite Stock Price Index, Functions, Benefits and Performance

If you want to invest in stocks or mutual funds, there is a lot to learn about them, and the HSG or Composite Stock Price Index is no exception. What is JCI? The definition of JCI is a database reference that is commonly used by investors today to decide whether to buy or sell an investment vehicle.

So what exactly does the JCI mean in full? What are the characteristics and factors that influence the JCI? Find the answers in this article so YOU ​​can be better prepared before jumping into the capital market as an investor!

Definition of Composite Stock Price Index (IHSG)

The definition of JCI is the price index used by the Indonesia Stock Exchange as a benchmark for investors to observe market movements and measure profits. This unit is known throughout the world as the Indonesia Composite Index (ICI) or the IDX Composite.

JCI has different issuers with different prices. You can find stock prices rising, falling, flat and stationary. Combining each security into one, the average daily price movement is displayed in JCI terms. 

Therefore, JCI is an index that can be used by various types of investors and the index is updated every day.

The benefits of JCI

1. Measure market sentiment
2. Manufacture of passive investment products such as index mutual funds, index ETFs, and derivative products
3. Active portfolio benchmarks
4. Proxies in measuring and modeling return on investment (return), systematic risk, and risk-adjusted performance
5. JCI is a proxy for asset class in asset allocation

JCI function

JCI is a collection of valuable gifts for all investors and shareholders. Apart from understanding, you also need to know the four features of the JCI. What's that? Here's the explanation:

Estimating profit levels

First, the function of the JCI is to estimate the average calculated level of an investment portfolio.

Look at the development of economic conditions

Second, the function of the JCI is to make it possible to see the economic development of a country using the index. There are many other variables to consider in determining whether a country is doing well economically, but the JCI remains an important part of it.

JCI plays a big role because the more investment in a country, the more capital. This large capital allows the state to benefit through taxes paid by corporations. Taxes allow the government to take new steps to improve people's welfare.

Market movement indicator

In addition, the JCI serves as an indicator of capital market movements. If the JCI trend rises, it is certain that the stock price of the capital market will also increase. Conversely, when the price index is weak, the stock price will fall.

It should be noted, however, that the values ​​quoted are average values, so the prices of shares held in the index may deviate from the provisions of the JCI.

Measure portfolio performance

The final function of the JCI is to measure portfolio performance. For example, you have been an investor for seven years. It turns out that the JCI has improved 200% in 10 years.

While the portfolio still performs below this percentage. So we have to see what went wrong in their investment patterns. Maybe there should be another strategy that can increase your profits.

This is an explanation of the Jakarta Composite Index (IHSG) that we can review for you. Hopefully this article can be useful for you!