Foreign funds have resumed investing in Indonesia's equity market, injecting $144.65 million this week and boosting the Jakarta Composite Index by 1.82% to 6,636. This substantial increase in foreign buying, accelerating from $17.56 million the previous week, has helped trim year-to-date net foreign equity outflows on the Indonesia Stock Exchange to $4.28 billion. Major beneficiaries of these inflows include large-cap state and private lenders, with Bank Rakyat Indonesia leading with $89.94 million in net inflows, followed by Bank Central Asia at $51.87 million and Bank Mandiri at $44.87 million.
Analysts attribute this renewed interest to the stabilization of the rupiah and the belief that interest rate pressures have peaked, which are seen as critical for a V-shaped market recovery. The benchmark index is currently trading at a decade-low valuation multiple of 14.2 times trailing earnings, significantly below its 10-year average of 20.6 times, making Indonesian equities attractive to bargain-hunting asset managers. Market strategists emphasize that a sustained rebound depends on a stable rupiah and easing yield pressures on sovereign bonds. The rupiah, which had depreciated to Rp 18,187 per greenback in June 2026, has since stabilized, providing the central bank with more flexibility.
Samuel Sekuritas has advised investors to reduce cash holdings to 5% and allocate 40% to equities and 40% to fixed income, with 10% in cryptocurrencies and 5% in gold. While foreign desks aggressively bought into energy and infrastructure conglomerate PT Dian Swastatika Sentosa Tbk at $33.42 million and state lender PT Bank Negara Indonesia Tbk at $15.86 million, they also trimmed positions in cyclical sectors, with poultry producer PT Charoen Pokphand Indonesia Tbk seeing net sales of $32.50 million and tech ecosystem PT GoTo Gojek Tokopedia Tbk experiencing $28.31 million in foreign liquidation. This concentrated banking inflow suggests a return to large-cap market leadership, according to Rully Arya Wisnubroto, Head of Research at Mirae Asset Sekuritas Indonesia, who noted a constructive domestic backdrop despite inflation risks.
