Jakarta. Indonesian stocks rebounded to gain nearly 1% by Monday’s midday trading, recovering from early losses as easing inflation, a wider trade surplus and stronger manufacturing activity lifted investor sentiment. The market also drew support from growing optimism over reforms aimed at improving transparency and restoring confidence in Indonesia’s capital market.

Jakarta Composite Index (JCI) rose 48 points, or 0.95%, to 5,105 at midday. The index fluctuated between 4,981 and 5,125 during the first trading session

According to IDX data, a total of 20.89 billion shares changed hands, generating Rp 6.96 trillion ($383.4 million) in transactions across 939,399 trades.

Pilar­mas Sekuritas Indonesia said easing inflation and Indonesia’s trade surplus provided positive catalysts for the market, reinforcing the country’s economic stability amid a return to manufacturing expansion.

Central Statistics Indonesia (BPS) reported that monthly inflation slowed to 0.22% in October from 0.30% in September 2026. Annual inflation also eased to 3.23% from 3.28% in the previous month.

The October figure remained within the government’s annual inflation target of 2.5% ± 1%.

Another positive signal came from Indonesia’s trade balance, which recorded a $3.36 billion surplus in September 2026. Exports reached $27.59 billion, while imports stood at $24.23 billion, Pilarmas said.

Manufacturing activity also strengthened, with Indonesia’s Manufacturing Purchasing Managers’ Index (PMI) rising to 54.0 in October from 52.4 in September.

“An index above 50 indicates that the manufacturing sector remains in expansion territory. The increase was supported by a surge in demand for domestic products, which drove production volumes and new orders,” Pilarmas added.

Beyond the economic data, market observer Hans Kwee said the JCI’s gains reflected growing investor appreciation of efforts to reform Indonesia’s capital market. Measures introduced by the Indonesia Stock Exchange (IDX) and market regulators could improve transparency, trading quality and investor confidence, he said.

“Capital market reforms in Indonesia have become one of the positive factors that market participants are beginning to take into account. These measures address several longstanding issues that have concerned investors, including foreign fund managers,” Hans said.

One significant measure is the exclusion of stocks with high shareholding concentration (HSC) from index calculations.

Hans explained that stocks with highly concentrated ownership tend to be more volatile, allowing their price movements to disproportionately affect the broader index. This has made it difficult for both domestic and foreign fund managers to use the index as an accurate representation of their portfolio performance.

“This is certainly positive because fund managers have frequently raised this issue. HSC stocks can sometimes be extremely volatile, causing the index to fluctuate and making it less representative of their portfolio conditions,” Hans said.

Hans outlined five reform measures that he believes could strengthen Indonesia’s capital market.

The first is removing HSC stocks from index calculations. The second is improving disclosure of share ownership, including the disclosure of holdings of 1% or more, which he said would give investors better information for their analysis.

The third involves changing the approach to monitoring stocks experiencing unusual price movements. Hans said directly addressing accounts suspected of irregular activity, imposing sanctions and announcing enforcement measures earlier could prove more effective.

He acknowledged that the Unusual Market Activity (UMA) mechanism serves as an early warning system for investors. However, he said the mechanism has also drawn complaints from retail investors because it can restrict trading activity.

The fourth measure is collaboration with Nasdaq to strengthen market surveillance. Hans said adopting its monitoring system to detect potential market manipulation could improve Indonesia’s capital market reputation while reinforcing oversight.

The fifth is stricter enforcement by market regulators, including imposing substantial fines for violations. Such action, he said, would demonstrate that regulators are exercising their supervisory responsibilities independently and without being influenced by any particular interests.

“The market should appreciate these five measures. They show that substantial efforts are being made to improve the capital market following the previous market decline,” Hans said.

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