A worker in Indonesia walks past a display showing live market trading data at the Indonesia Stock Exchange (IDX) in Jakarta.
Adek Berry | AFP | Getty Images
Indonesian stocks have staged a sharp comeback from a five-year low reached in early June, helped by appealing valuations, swift action from domestic financial regulators and signs that foreign investors are gradually returning to the market.
The Jakarta Stock Exchange Composite Index remains lower by roughly 29% for the year, but it has climbed more than 10% from last month’s bottom, meeting the commonly used threshold for a bull market, according to LSEG data. Investor confidence also received a lift after S&P Global Ratings recently reaffirmed Indonesia’s BBB sovereign credit rating and maintained a stable outlook.
“S&P’s affirmation removed an important macro overhang,” said Mohit Mirpuri, senior partner at SGMC Capital. “Over the past month, we’ve seen the market transition from pricing in deterioration to pricing in stabilization.”
The rebound follows a turbulent stretch for Indonesian equities in 2026. Earlier in the year, index provider MSCI raised concerns about corporate governance across a number of Indonesian-listed companies and said it would review whether the market should be downgraded from emerging-market status to frontier-market status. Issues cited included limited free floats and concentrated ownership structures at many firms.
MSCI eventually chose not to downgrade Indonesia’s classification, a decision that Capital Economics senior economist Gareth Leather described as “a big relief” for investors and one that helped stop the wave of panic selling. He said some investors also began rotating out of richly valued artificial intelligence and technology shares, redirecting money toward markets that looked cheaper and more defensive.
“After months of heavy selling, Indonesian equities simply became too cheap to ignore,” Liza Camelia, head of research at Kiwoom Sekuritas Indonesia, told CNBC.
Investors were also relieved that fiscal risks may be less severe than previously feared, after government revenue surprised on the upside, with tax collections recovering strongly during the first half, Camelia noted.
The Indonesian regulator’s measures to have a higher minimum free float and tighter ownership disclosure requirements also helped “to address the market’s thin liquidity and associated transparency and concentration issues that drove some investors out,” said Jeemin Bang, associate economist at Moody’s Analytics.
