Indonesia Stocks: A Window Amid Volatility
After Trump’s tariff shock and a sharp sell-off, the JCI rebounded post-Lebaran. With valuations still attractive, Indonesia’s equity market presents a long-term opportunity.
Rare Window of Opportunity
After a whirlwind of headlines and global market reactions, Indonesia’s equity market offers long-term investors a rare window of opportunity.
Earlier in April, President Trump announced a fresh round of reciprocal tariffs, including Indonesia. This triggered a wave of global sell-offs in the equity markets, sending the Jakarta Composite Index (JCI) below the 6,000 mark. Just a week later, he paused the plan, hoping to draw countries into negotiations that could benefit the US. Markets responded swiftly, with the JCI resuming its upward momentum post the market correction after Lebaran.
Despite a rebound in April, the JCI’s valuation remains attractive. It’s still trading around the same levels as last year when markets were hopeful for U.S. rate cuts. The dislocation between fundamentals and price presents an opportunity to invest further in domestic equities.
Why We're Still Bullish
Valuation is still on our side. The JCI hasn’t priced in recent macro improvements, making this a strong entry point for investors with a long-term view.
Local liquidity is strong. Institutional investors like pension funds and insurers have been steady buyers. On top of that, listed companies are doing share buybacks, which help support prices.
Indonesia’s economy remains stable, even as consumption softens. We don’t see this as a structural issue, as investors, both local and foreign, wait for clearer signals from President Prabowo’s early policy moves and visibility on the global trade landscape.
Danantara, the sovereign wealth fund, holds significant cash reserves and could act as a major stabilizer and catalyst when deployed into the domestic capital markets.
IDR Strength and Capital Flow Dynamics
Currency trends are further reinforcing Indonesia’s investment case. The Indonesian Rupiah (IDR) has strengthened to 16,400 against the USD, down from its 16,800 level. This is partly thanks to Bank Indonesia’s USD bond issuance (SVBI & SUVBI) and the DHE policy, which keeps miners' export earnings domestically while offering competitive returns.
In the background, foreign investors, including central banks in China and Japan, are pulling back from U.S. dollar assets. With the weakening USD, this supports the financial performance of Indonesian companies that tend to import as this reduces their foreign exchange costs. That’s good news for emerging markets like Indonesia.
Lower Oil Prices: A Hidden Tailwind
Oil prices have slipped to $57–$60 per barrel, down from $65–$75. While it might seem negative on the surface, it’s actually a boost for Indonesia:
Lower input costs for businesses
Potentially cheaper retail prices
More room for consumer spending
All this could help reinvigorate domestic demand and improve corporate earnings in the months ahead.
Positioning for Growth
Tariff fears created the dip and confidence is driving the recovery where there is strong domestic liquidity backed by a resilient macro fundamental, we believe the current valuation disconnect presents a compelling case for long-term investors despite the short-term potential market movements.
Our Sustainable Equity Fund is well-positioned to take advantage of this window. With a disciplined investment process, a focus on fundamentals, and an emphasis on sustainability, the Fund aims to generate strong long-term returns while mitigating downside risks.
As always, investors are encouraged to align their allocation with their risk tolerance and long-term goals but current market conditions suggest that Indonesia deserves a closer look.