Index Evaluating Islamic and Conventional Stock Market Behavior in Indonesia: IHSG and JII Performance during Prabowo's First Year in Office

Purpose: This study aims to examine and compare the performance behavior of Indonesia’s conventional and Islamic equity markets during the first year of President Prabowo Subianto’s administration (20 October 2024–20 October 2025). Specifically, it investigates how political transitions and early policy signals influenced the short-term and cumulative responses of the Indonesian Composite Index (IHSG) and the Jakarta Islamic Index (JII). Materials and Methods: The research employs an event study methodology to calculate Abnormal Return (AR), Average Abnormal Return (AAR), and Cumulative Average Abnormal Return (CAAR) for both IHSG and JII, using daily index data throughout the observation window. To complement the event study analysis, a non-parametric Mann–Whitney U Test is conducted to determine whether significant differences exist between the return distributions of the two indices. Results: The empirical findings reveal distinct differences in the market behavior of IHSG and JII. IHSG demonstrates higher volatility and greater responsiveness to macroeconomic announcements, fiscal policy directions, and geopolitical developments. In contrast, JII displays relatively more stable behavior in both abnormal and cumulative abnormal return measurements. The CAAR trends indicate that Islamic equities achieve more consistent cumulative gains, highlighting the relative resilience of Sharia-compliant investments during periods of political transition. Statistical testing through the Mann–Whitney U Test confirms significant divergence in AR patterns between the two indices. Conclusion: The study concludes that conventional and Islamic equity markets in Indonesia respond differently to political transitions. JII exhibits more stable and resilient performance compared to IHSG, suggesting the potential stabilizing role of Islamic capital markets in emerging economies during periods of political adjustment. These results offer important implications for policymakers, investors, and financial regulators in evaluating risk, designing portfolio diversification strategies, and advancing the development of Islamic financial instruments.