Flooring Guide by Cinvex – , JAKARTA — The movement of the Jakarta Composite Index (IHSG) is projected to strengthen once again from December 2025 to January 2026, driven by the historical phenomenon known as the Santa Claus Rally, which typically acts as a significant catalyst.
M. Nafan Aji Gusta Utama, Senior Market Analyst at Mirae Asset Sekuritas Indonesia, elaborated that the Santa Claus Rally refers to the market’s tendency to ascend during the last five trading days of December and the first two trading days of January. Historical data from the U.S. market (S&P 500) reveals an average gain of 1.3% during this seven-day period, with a substantial probability of increase ranging from 70% to 75%.
A similar phenomenon has been observed in Indonesia. Reports from Mirae Asset indicate that the composite index often experiences strengthening in the final trading days of December, although this pattern is not entirely consistent every year. According to Nafan, four primary factors underpin this seasonal uptrend. These include window dressing and institutional portfolio rebalancing activities, reduced trading volumes that facilitate price appreciation, positive holiday sentiment, and the anticipation of next year’s growth fueled by fiscal stimulus or new policies.
However, Nafan cautioned on Wednesday, December 3, 2025, that adverse global sentiment or unexpected domestic macroeconomic shocks could potentially negate the effects of the Santa Claus Rally. He further noted that a market that has already priced in rally expectations might also see the impact of this phenomenon diminished.
Nafan added that, based on the average performance over the last 25 years, the IHSG indeed tends to strengthen from December to January. This trend opens up opportunities for both the Santa Claus Rally and the January Effect to occur. Nevertheless, investors are advised to remain cautious, as these phenomena are short-term in nature, offer limited upside potential, and should not be the sole basis for investment decisions.
For investors navigating these market conditions, several key tips are recommended. These include closely monitoring liquidity and trading volumes, adopting moderate positions, and consistently paying attention to fundamental market and economic conditions. “Ensure you don’t enter too late or ‘ride the hype’ without a thorough understanding. If many market participants anticipate a Santa Claus Rally, the market may have already factored it in, or it could even become a contrarian play,” Nafan stated.
Fundamentally, the domestic economy provides robust support for a potential year-end rally. Economic growth for the fourth quarter of 2025 is projected to reach between 5.4% and 5.6%, with inflation well-controlled within the 1.5%-3.5% range. These stable conditions are expected to provide room for Bank Indonesia to potentially lower interest rates, thereby boosting liquidity in the market.
The government is also actively preparing various year-end stimulus measures. These include social assistance programs valued at Rp30 trillion, strategic sector discount programs also amounting to Rp30 trillion, and mass credit facilities for 50,000 housing entrepreneurs, all designed to inject vitality into the economy. Technically, the IHSG is predicted to maintain an upward trend, with a positive scenario targeting the 8,940 level and a negative scenario at 7,959 for the 2025-2026 period.
Based on data from the Indonesia Stock Exchange, the IHSG closed slightly corrected by 0.06% to the 8,611.79 level in trading on Wednesday, December 3, 2025. Year-to-date in 2025, the IHSG has posted a significant gain of 21.64%.
: Mandiri Sekuritas Predicts IHSG to Reach 9,350 by 2026, Check Its Leading Sectors
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Summary
The Jakarta Composite Index (IHSG) is projected to strengthen from December 2025 to January 2026, influenced by the historical “Santa Claus Rally.” This phenomenon refers to a market tendency to ascend during the last five trading days of December and the first two of January, with historical data showing an average gain in the U.S. market. This uptrend is typically driven by factors such as window dressing, reduced trading volumes, positive holiday sentiment, and the anticipation of next year’s growth. Although observed in Indonesia, this pattern is not entirely consistent every year.
Conversely, adverse global sentiment or unexpected domestic macroeconomic shocks could potentially negate the rally, and a market already pricing in expectations might diminish its impact. Despite the IHSG’s historical tendency to strengthen from December to January, investors are advised to remain cautious, as these phenomena are short-term and offer limited upside potential. Fundamentally, strong domestic economic growth projections, controlled inflation, potential interest rate cuts, and government stimulus measures provide robust support for a potential year-end rally.