The Trump Tariff Era and its Transmission to Emerging Economies: Empirical Insights from Indonesia’s Shariah Stock Index

Purpose: This study examines the transmission of trade policy shocks from the Trump tariff era to Indonesia’s Islamic capital market, focusing on the Indonesia Sharia Stock Index (ISSI), Jakarta Islamic Index 70 (JI70), and Jakarta Islamic Index (JII). Materials and Methods: Using daily data from April to September, the study applies return analysis, abnormal return estimation, and cumulative abnormal return (CAR) calculations to assess the market response to U.S.–China trade tensions. Results: Findings show that Islamic indices generally move in line with the broader IDX Composite, though trade tensions increased volatility and caused short-term fluctuations, particularly in June and August. ISSI displayed significant abnormal returns compared to the composite index, suggesting greater sensitivity to global trade shocks. Despite this volatility, all indices recorded positive CAR values—ISSI (0.1250), JI70 (0.1099), and JII (0.0909)—indicating sustained medium-term resilience. Conclusion: Indonesia’s Shariah-compliant equity market is affected by international trade policies but remains stable and competitive. These findings highlight the resilience of Islamic indices in emerging markets and provide insights for policymakers and investors on diversification and strengthening Islamic capital market performance.

Authors

Publication Details

Journal
Global journal of economic and finance research.
Published
2025-10-15
DOI
https://doi.org/10.55677/gjefr/11-2025-vol02e10
Primary Topic
Islamic Finance and Banking Studies
Type
article
Field-Weighted Citation Impact
0.00
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article

The Trump Tariff Era and its Transmission to Emerging Economies: Empirical Insights from Indonesia’s Shariah Stock Index

Iskandar Muda, Andri Soemitra, Yusrizal Yusrizal, Oktavera Rizki et al.
Global journal of economic and finance research.
Islamic Finance and Banking Studies
article

The Trump Tariff Era and its Transmission to Emerging Economies: Empirical Insights from Indonesia’s Shariah Stock Index

Iskandar Muda, Andri Soemitra, Yusrizal Yusrizal, Oktavera Rizki, Yunita Dalimunthe
article en

Abstract

Purpose: This study examines the transmission of trade policy shocks from the Trump tariff era to Indonesia’s Islamic capital market, focusing on the Indonesia Sharia Stock Index (ISSI), Jakarta Islamic Index 70 (JI70), and Jakarta Islamic Index (JII). Materials and Methods: Using daily data from April to September, the study applies return analysis, abnormal return estimation, and cumulative abnormal return (CAR) calculations to assess the market response to U.S.–China trade tensions. Results: Findings show that Islamic indices generally move in line with the broader IDX Composite, though trade tensions increased volatility and caused short-term fluctuations, particularly in June and August. ISSI displayed significant abnormal returns compared to the composite index, suggesting greater sensitivity to global trade shocks. Despite this volatility, all indices recorded positive CAR values—ISSI (0.1250), JI70 (0.1099), and JII (0.0909)—indicating sustained medium-term resilience. Conclusion: Indonesia’s Shariah-compliant equity market is affected by international trade policies but remains stable and competitive. These findings highlight the resilience of Islamic indices in emerging markets and provide insights for policymakers and investors on diversification and strengthening Islamic capital market performance.

Global journal of economic and finance research.Vol. 02(10)
Openalex Percentile: Top 57%
Islamic Finance and Banking Studies
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