Jakarta. Indonesian stocks climbed sharply on Tuesday, with the benchmark Jakarta Composite Index (JCI) gaining 1.74% as investors welcomed the government's proposal to establish the Indonesia International Financial Center (PFII), while awaiting Bank Indonesia's latest interest rate decision.

JCI rose 108 points to close at 6,340 after trading between 6,247 and 6,340. Market turnover reached Rp 21.3 trillion ($1.19 billion) from 50.8 billion shares traded across more than 2.9 million transactions. A total of 421 stocks advanced, 205 declined, and 169 were unchanged.

Pilarmas Investindo Sekuritas said the rally was driven by optimism over the proposed PFII, which investors see as a strategic move to strengthen Indonesia's financial sector and position Jakarta as a regional financial hub.

"The initiative is viewed as a strategic government step to improve the competitiveness of Indonesia's financial sector and strengthen Jakarta's position as a regional financial center," Pilarmas wrote in a research note on Tuesday.

According to the brokerage, the proposed financial center would allow transactions in foreign currencies while using English as the operating language, a policy that could attract more international investors and boost activity in Indonesia's financial markets.

Still, Pilarmas said investors remained cautious ahead of Bank Indonesia's two-day policy meeting, which began on Tuesday, as markets awaited the central bank's interest rate decision after it raised its benchmark rate by a cumulative 100 basis points in May and June to stabilize the rupiah.

Global investors were also closely monitoring the continuing conflict in the Middle East, which has kept concerns over energy prices and inflation elevated.

Although oil prices eased early Tuesday after rising the previous day, Brent crude still traded well above pre-war levels. The international benchmark fell 1% to $88.33 per barrel, compared with about $72 before the conflict began in late February.

"The situation has once again fueled inflation concerns and increased the likelihood that global interest rates will remain higher for longer," Pilarmas said.

The brokerage also noted that higher oil prices could add pressure to Indonesia's fiscal position. However, it said the government's first-half 2026 budget realization remained on track, helping sustain market confidence.

Elsewhere in Asia, equities mostly advanced as investors returned to technology and semiconductor shares following recent selloffs.

South Korea's Kospi jumped 3.6% to 6,747, with Samsung Electronics surging 6.8% and memory chipmaker SK Hynix rising 4.9%.

Japan's Nikkei 225 gained 3% to 66,067 after reopening from a Monday holiday, recovering part of last week's losses.

Hong Kong's Hang Seng Index edged up less than 0.1% to 25,151, while China's Shanghai Composite Index climbed 1.4% to 3,850.

Overnight on Wall Street, the S&P 500 slipped 0.2% to 7,443. The Dow Jones Industrial Average fell 0.6% to 51,839, while the Nasdaq Composite eased less than 0.1% to 25,508.

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