Heightened Social Unrest Led to Market Dip — Our Take
Indonesia stocks and bonds dip on political unrest, not fundamentals. We see this as a buying opportunity in blue-chips and bonds.
Today, Indonesian capital markets, both equities and government bonds, closed lower. The JCI declined -1.5%, while bond prices also softened, largely on the back of foreign investor outflows. The moves were not driven by domestic economic fundamentals but rather by near-term political and social developments, including ongoing demonstrations in Jakarta.
How did we respond?
We used the market weakness as an opportunity, deploying the remaining cash buffer to position ourselves fully invested. Our conviction remains unchanged, Indonesia’s economic structure is sound, and we are comfortable with our strategy of balancing momentum-driven names with high-quality blue-chip stocks.
Looking ahead
We plan to increase exposure to select blue-chip equities, which stand to benefit from a potential shift in U.S. monetary policy. Prospects of interest rate cuts by the Federal Reserve could improve capital flows into emerging markets, including Indonesia.
What this means for you
The last Capital Call was in May, following market volatility related to U.S. tariff developments. Since then, equities have seen a strong rally, with a modest pullback today driven more by sentiment than by underlying economic fundamentals. Unlike the May correction, this movement appears tied to short-term political developments rather than structural concerns.
We believe this presents a compelling entry point. For investors with the right risk profile and investment horizon, now is an opportune moment to increase allocations in our Equity and Bond Fund.
We remain confident in our outlook: Indonesia’s fundamentals are intact, and once sentiment stabilizes, markets are well positioned to recover.