Monthly Investor Update July 2026
Indonesia's IHSG rallied 6.8% in July amid a BI-Rate hold and a surprise Governor resignation. Full market recap, fund performance, and our August outlook.
Dear Simpan Client,
July delivered the turnaround Indonesian equity investors had been waiting for. After a punishing first half, the IHSG climbed from around 5,800 to roughly 6,200 (a 6.8% monthly gain) as foreign selling pressure eased sharply and a string of policy signals confirmed the market had found its floor. But with much of that recovery now behind us, the more interesting question is what comes next.
Here’s what moved the market in July, how our portfolios were positioned, and where we stand heading into August.
Market Highlights
IHSG +6.8%: The index rallied from ~5,800 to ~6,200 as June’s negative sentiment unwound. Foreign outflows eased sharply to Rp 7 trillion, down from Rp 23 trillion in June.
S&P affirms Indonesia at BBB/A-2, Stable outlook (13 July): A more constructive outcome than the outlook downgrade we’d flagged as our base case, though the Stable outlook hinges on the government holding its fiscal deficit under 3% (current projection: -2.9%). Moody’s and Fitch remain on Negative outlook.
Bank Indonesia holds the BI-Rate at 5.75%: Pausing after back-to-back hikes in May and June; the consensus move toward 6.00% didn’t materialize.
BI Governor Perry Warjiyo resigns: Destry Damayanti steps in as interim Governor, with no permanent successor yet announced, a new source of policy uncertainty.
The Fed holds at 3.50%–3.75%: Keeping the BI-Fed spread near 200bps, which, near-term, works in Indonesia’s favor by limiting the pull of capital toward US assets.
How Did AMP Perform?
We increased equity exposure across Risk Levels 2 through 5 in July on the view that June’s correction had largely priced in the negative sentiment and that call played out well, with strong monthly gains across those tiers. AMP Core (Risk 1), which carries no strategic equity allocation, also posted a modest positive return, reflecting its more defensive cash-to-bond positioning.
Following a rally of that scale, we don’t expect the market to extend at the same pace. Combined with the leadership uncertainty from Governor Warjiyo’s resignation, we reduced equity allocation proportionally across Risk Levels 2 through 5 heading into August, reallocating into cash and fixed income to lock in part of July’s gain. We still retain a meaningful equity weighting — our medium-to-long-term conviction on Indonesian equities is intact, supported by valuations more than two standard deviations below their twenty-year average. For Risk Level 1, we took a more defensive stance, raising cash and trimming bond exposure until Bank Indonesia’s leadership and policy direction become clearer.
How Did Simpan Funds Perform?
All funds under our management outperformed their respective benchmarks in July, except the Simpan Dollar Bond Fund. Simpan Sustainable Equity Fund and Simpan Balanced Fund posted strong gains ahead of benchmark. Money Market Funds again delivered steady outperformance, while Simpan Bond Fund was broadly flat, in line with benchmark, amid the volatility from BI's rate hold and the Governor's resignation.
Key Trades of the Month
Equity - Banking: We trimmed BBRI, BBNI, and BMRI, anticipating Net Interest Margin pressure as Bank Indonesia’s rate hikes push up banks’ Cost of Funds, compounded by continued foreign selling.
Equity - Transportation: We added to BULL as US-Iran tensions around the Strait of Hormuz drove global shipping rates sharply higher. BULL remains our key proxy for global energy shipping and a primary beneficiary of elevated freight rates.
Fixed Income: Portfolio duration held at 5.24 years, broadly in line with the 5.30-year benchmark. We remain cautious on duration into August given bond market uncertainty, while selectively evaluating opportunities at the front end of the yield curve.
Outlook & Positioning for August
We’re taking a more measured view on Indonesian equities following July’s recovery (expect consolidation rather than a continued rally). The longer-term case, though, is intact: the JCI still trades more than two standard deviations below its twenty-year average, a discount previously seen only in 2008 and 2020. Blue-chip proxies like LQ45 and IDX30 trade at an unusually wide discount to the broader index and, in our view, hold the most room to re-rate if foreign flows continue returning.
In fixed income, the Fed’s hold gives Indonesian government bonds short-term stability. We remain positioned defensively, favoring money market instruments over fixed income, and short-tenor over long-tenor government bonds, until Bank Indonesia’s leadership and policy direction settle.
Key watchpoints for August: the appointment of a permanent BI Governor, the MSCI November review, and Indonesia’s fiscal deficit trajectory underpinning S&P’s Stable outlook.
We thank you, as always, for your continued trust and confidence.
— Simpan Asset Management
Disclaimer: Investments in the fund products contain investment risk. Historical returns do not guarantee future returns. Every prospective investor is required to read and understand the terms and conditions of the prospectus or investment guidelines of each fund product, including the risks mentioned above.