The Effect Of Foreign Portfolio Investment On The Volatility Of The Sharia Infrastructure Sector Index

The large gap in the ability to finance domestic infrastructure projects makes the need for foreign investment important. The contribution of foreign portfolio investment to strengthen the domestic capital market and its infrastructure will increase the allocation of domestic capital. This study aims to examine the impact of foreign portfolio investment inflows, especially on Islamic infrastructure stocks. A sampling of 17 issuers was carried out using the purposive sampling technique during the research period from 03 January 2017 to 28 April 2022. The method used was the GARCH model. Trading in foreign portfolio investment has a statistically significant effect on the volatility of the sharia infrastructure sector index. The results of this study can be a source of information for the government to consider sound monetary policy and stronger supervision in the financial system as well as macroeconomic variables, particularly exchange rates that affect foreign investment flows in Indonesia. Policies aimed at attracting more capital at the same time consider possible negative effects, such as sudden outflows of capital or short-term reversal of capital flows.