Jakarta. Indonesia’s benchmark stock index surged to an all-time high this week, lifted by strong domestic liquidity and optimism over monetary easing both at home and abroad.

The Jakarta Composite Index (JCI) climbed 1.72 percent to 8,257.86 on Friday, marking its highest level in history and extending gains for a second straight week. The rally pushed the market capitalization of the Indonesia Stock Exchange (IDX) to a record Rp 15,560 trillion ($974 billion), up 3.19 percent from the previous week.

Trading activity also showed impressive momentum, with the average daily transaction value jumping 12.48 percent to Rp 28.15 trillion, and trading frequency rising 11.83 percent to 2.93 million times. Only trading volume fell slightly, down 14.9 percent to 42.3 billion shares.

Despite mild profit-taking before the weekend, analysts said the JCI’s uptrend remains intact and could soon set another record.

“The momentum is still strong, supported by solid domestic liquidity, sector rotation into energy and commodities, and optimism after recent rate cuts by Bank Indonesia and the US Federal Reserve,” said Muhammad Wafi, head of research at KISI Sekuritas.

According to Wafi, the index’s next resistance is at 8,300, and as long as local funds dominate and energy shares lead, “breaking through to the 8,250–8,300 range is quite realistic in the near term.”

Wafi cautioned, however, that short-term risks remain, including potential profit-taking after a two-week rally, rising US Treasury yields, and uncertainty surrounding the possible US government shutdown.

Investors are also turning their attention to the upcoming third-quarter earnings season, which could influence market sentiment. “If earnings come in below expectations, we may see a brief consolidation,” he said.

Energy and green commodity stocks are expected to remain in focus, with Barito Renewables Energy (BREN), Barito Pacific (BRPT), Dian Swastatika Sentosa (DSSA), Amman Mineral (AMMN), and Merdeka Copper Gold (MDKA) among top picks. Major banks such as Bank Rakyat Indonesia (BBRI), Bank Mandiri (BMRI), and Bank Central Asia (BBCA) continue to serve as defensive anchors.

According to Ekky Topan, an analyst at Infovesta Kapital Utama, the rally has been driven primarily by local investors taking advantage of lower interest rates and steady macroeconomic conditions. “If third-quarter results are strong and fiscal policy under the new government becomes clearer, foreign investors could return,” he said.

Foreign investors recorded net purchases of Rp 728.9 billion on Friday, though they remain net sellers of Rp 53.49 trillion year-to-date.

Market observer and Republic Investor founder Hendra Wardana said the JCI’s gains also reflect positive global sentiment, following Fed minutes hinting at more rate cuts this year and easing geopolitical tensions in the Middle East. “News that Israel and Hamas are exploring peace talks has reduced global risk appetite, prompting investors to return to equities,” he said.

Domestically, data showed retail sales grew 3.5 percent year-on-year in August, signaling that household consumption remains robust. The government is also preparing a Rp 70 trillion ($4.4 billion) fourth-quarter stimulus package aimed at boosting purchasing power and accelerating infrastructure projects.

Finance Minister Purbaya Yudhi Sadewa said the new stimulus package will reinforce existing programs by creating jobs, boosting household spending, and accelerating infrastructure development. “This policy will sustain economic momentum through the end of 2025 and support growth into 2026,” he said.

The newly appointed minister also cautioned the Indonesia Stock Exchange (IDX) against speculative trading, saying the bourse would not receive any fiscal incentives unless it strengthened enforcement against stock manipulation, locally known as goreng saham. He warned that such practices continue to erode investor confidence and undermine market integrity.

A report from Pilarmas Sekuritas noted that Indonesia’s macro stability, global monetary easing, and fiscal stimulus provide strong support for further gains. “We see the JCI trading within a positive range of 8,140 to 8,300, with limited downside risk,” the firm wrote.

Bank Indonesia has cut its benchmark rate by 125 basis points since late 2024, a move analysts believe will strengthen liquidity and help maintain stable capital inflows.

While the JCI may see intermittent pullbacks, analysts remain optimistic that the index could break above 8,300 by year-end. “As long as domestic investors stay dominant and the economy keeps expanding, Indonesia’s stock market still has room to climb higher,” Wafi said.