Net Foreign Buying, Global Equity Markets and The Indonesia Sharia Stock Index

This study examines how net foreign buy and global capital market indices affect the Indonesia Sharia Stock Index (ISSI). Research Methods: The study uses monthly secondary data for 2019--2024 obtained from the Indonesia Stock Exchange (IDX), the Financial Services Authority (OJK), Bank Indonesia and international financial databases. The data are analysed with the Autoregressive Distributed Lag (ARDL) model and its error correction form. Results and Discussion: Net foreign buy has no significant contemporaneous effect on the ISSI in the short run, although its third lag is negative and significant; in the long run, its effect is positive and significant. Global capital market indices have a positive and significant effect on the ISSI in both the short and the long run. The error correction term (−0.153; p \< 0.01) shows that about 15% of any deviation from the long-run equilibrium is corrected each month. Conclusion: Investors should incorporate global capital market indicators into their investment decisions and portfolio risk management. Regulators need to strengthen the resilience of Indonesia's Islamic capital market against global financial shocks and broaden its domestic investor base.