Indonesia Market Rallies, but Foreign Investors Stay on the Sidelines
Jakarta. Indonesia’s benchmark stock index rebounded sharply last week, even as foreign investors continued to pull funds and global index providers kept the market under scrutiny.
The Jakarta Composite Index (IDX) rose 3.49% in the week of Feb. 9–13 to close at 8,212.271, up from 7,935.260 a week earlier, according to data from the Indonesia Stock Exchange. Trading activity strengthened, with average daily volume increasing 4.73% to 45.24 billion shares from 43.20 billion shares previously.
The rally lifted total market capitalization 3.83% to Rp 14,889 trillion ($878.45 billion), compared with Rp 14,341 trillion in the prior week.
Still, foreign investors remained net sellers, booking Rp 2.03 trillion in net outflows during the week. Year-to-date in 2026, foreign investors have recorded cumulative net sales of Rp 16.49 trillion, underscoring lingering caution toward Southeast Asia’s largest equity market.
The rebound comes after weeks of pressure triggered by concerns over Indonesia’s investability. Earlier scrutiny from MSCI Inc. prompted a temporary trading halt, while Moody’s Ratings revised Indonesia’s sovereign outlook to negative, weighing on bond markets and the rupiah.
Investor unease resurfaced when FTSE Russell postponed its planned March review of Indonesian equities. The delay is linked to ongoing questions over public share ownership, or free float.
FTSE said it would continue monitoring reform progress and provide updates in its quarterly review of the FTSE Global Equity Index Series on May 22, 2026.
Global banks have echoed the caution. Goldman Sachs downgraded Indonesian equities to underweight from market weight, while UBS Group removed Indonesia from its list of preferred markets, citing concerns tied to MSCI’s assessment of market accessibility and governance standards.
In response, the exchange is preparing an accelerated action plan targeted for completion before the end of April. A key measure involves refining investor classification within the Single Investor Identification system at the central securities depository, expanding categories from nine to 28 subcategories to improve transparency and ownership data accuracy.
The bourse also plans to propose lowering the ownership disclosure threshold from above 5% to above 1%, aligning with international practice, including India. Additionally, the minimum free float requirement for listed companies would rise from 7.5% to 15% to maintain listing eligibility.
Authorities are also working to reassure investors on the macro front. The Finance Ministry is targeting stronger tax collection to keep the fiscal deficit below the legal cap of 3% of gross domestic product and raise the tax ratio to 11%–12% by 2026. The tax ratio had slipped to around 9% amid the 2025 economic slowdown.
Measures include expanding digital transaction taxes, broadening excise coverage, strengthening customs enforcement, and optimizing non-tax state revenue — particularly in natural resources — through the SIMBARA monitoring system.
The government held a high-level discussion on Friday to present a comprehensive assessment of economic conditions and policy responses to global developments. Officials hope the briefing will calm markets following Moody’s outlook revision and demonstrate that fiscal discipline and structural reform remain intact.
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