Jakarta. Indonesian stocks extended losses on Wednesday, falling more than 1% within the first 15 minutes of trading after opening 0.32% lower at 5,249, as concerns over slowing economic growth, a weakening rupiah and potential MSCI index rebalancing weighed on sentiment.

Jakarta Composite Index (JCI) traded between 5,183 and 5,255 in early trading. Trading volume reached 4.17 billion shares, with a turnover of Rp 1.64 trillion ($90.19 million) across 208,926 transactions. A total of 157 stocks advanced, 439 declined and 141 remained unchanged.

Phintraco Sekuritas said Fitch Ratings expected Indonesia's economic growth to slow to below 5% in the second half of 2026. This would put full-year growth at a maximum of 5.2%, below the government's target of 5.4%.

Fitch attributed the slowdown to the fading impact of fiscal support after government spending was concentrated in the first half of the year. Consumer spending is also expected to moderate through the remainder of 2026 as consumer confidence weakens from levels seen earlier this year.

Amid heightened uncertainty, investors have increasingly favored short-term trading strategies, Phintraco Sekuritas said.

Several external and domestic pressures continued to weigh on the market, including elevated oil prices, the possibility of a US Federal Reserve rate hike in December, continued rupiah depreciation, rising five-year Indonesian credit default swap (CDS) spreads and higher government bond yields.

“Investors are also anticipating a potential MSCI index rebalancing in November, which has added to negative sentiment,” Phintraco Sekuritas said.

Pluang Research, in a report on Wednesday, highlighted a contrast between the stock market's decline and the solid third-quarter earnings reported by major banks.

The JCI fell nearly 2% in the previous session as the rupiah weakened to Rp 18,164 per US dollar. Meanwhile, Bank Mandiri reported a net profit of Rp 45.5 trillion, up 20.7%, supported by significantly improved efficiency and stable asset quality.

Bank Negara Indonesia (IDX: BBNI) recorded its highest-ever pre-provision operating profit for a third quarter, supported by 22.2% credit growth. Bank Central Asia (BBCA) maintained consistent performance, reporting a net profit of Rp 45.2 trillion alongside a low nonperforming loan (NPL) ratio.

“Current price pressures largely reflect sentiment, ranging from rupiah weakness and MSCI uncertainty to corrections across Asian stock markets, rather than a deterioration in banking fundamentals,” Pluang Research said.

“When earnings continue to grow while share prices decline, valuations become increasingly attractive. Combined with dividend yields of around 10% to 14% for state-owned banks, well above government bond yields, this provides long-term investors with a meaningful cushion while prices remain volatile,” it added.

The role of state-owned banks in the index is also expected to increase from Nov. 2, when HSC shares will be excluded from the JCI calculation, automatically raising the index weights of Bank Rakyat Indonesia (BBRI), Bank Mandiri (BMRI) and BNI (BBNI).

However, Pluang Research cautioned against investing all at once, as volatility could persist while MSCI-related concerns and rupiah pressures remain unresolved. It recommended gradually buying on dips rather than attempting to predict the market bottom.

Meanwhile, Kiwoom Sekuritas Indonesia said global investor sentiment had improved as interest in technology and artificial intelligence (AI) stocks recovered.

US stocks closed higher on Tuesday, with the S&P 500 rising 0.60% to 7,722 and the Nasdaq Composite gaining 1.18%. The Dow Jones Industrial Average edged up 0.03%.

Across regional markets as of 9:15 a.m. Jakarta time on Wednesday, Japan's Nikkei 225 rose 1.35%, while South Korea's Kospi surged 6.24%. Hong Kong's Hang Seng slipped 0.03%, while Shanghai's SSE Composite Index gained 0.45%.

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