Indonesia’s Market Faces Headwinds as Oil Prices Rise and Fiscal Concerns Mount

Jakarta, March 16, 2026 – Indonesian stocks experienced a downturn on Monday, with the Jakarta Composite Index (JCI) falling to 7,022.3, a level not seen since July 2025. The decline was driven by concerns over rising oil prices, potential budget deficits, and decreasing market liquidity as the Eid period approaches.

Market Performance and Key Declines

The JCI closed down 1.6% on Monday, with only 180 out of 910 shares finishing in positive territory. Significant downward pressure came from PT Dian Swastatika Sentosa ($DSSA), which fell 19.1%, followed by Bumi Resources Minerals ($BRMS) and Amman Mineral International ($AMMN), declining 17.2% and 13.4% respectively.

Oil Prices and Fiscal Concerns

Brent oil prices have risen to $104.9 per barrel, fueled by geopolitical tensions and threats to oil export centers. This increase is raising concerns about Indonesia’s state budget (APBN) deficit. President Prabowo Subianto has stated that a deficit exceeding 3% of GDP would only be temporary, reserved for emergency situations, while reaffirming a commitment to fiscal discipline. However, achieving the deficit target is becoming increasingly challenging, particularly if oil prices remain high.

Coordinating Minister for Economic Affairs, Airlangga Hartarto, indicated that government analysis of oil price fluctuations and the rupiah exchange rate suggests that meeting the deficit target will be demanding without cuts to state spending. Finance Minister Purbaya Yudhi Sadewa warned that a deficit of up to 3.6% of GDP could occur if oil prices remain in the $90–$92 per barrel range without budget adjustments.

President Prabowo has committed to protecting funding for the Free Nutritious Meals program and is exploring other solutions, such as reducing fuel consumption, to mitigate the fiscal impact.

Rupiah and Bond Yields

Amidst these concerns, the rupiah exchange rate depreciated by 0.23% to 16,990 against the US dollar. The yield on 10-year government bonds rose 12 basis points to 6.914%, reaching its highest level since May 2025.

Sector Opportunities and Market Outlook

Despite the overall market weakness, analysts suggest that the coal and crude palm oil (CPO) sectors may present opportunities for investors. Historically, rising oil prices have often been followed by increases in coal and CPO prices, Indonesia’s two main export commodities. Companies like Adaro Andalan Indonesia ($GO), Indo Tambangraya Megah ($ITMG), Triputra Agro Persada ($TAPG), and Dharma Satya Nusantara ($DSNG) are being highlighted as potential beneficiaries.

Index Revisions and Corporate Actions

Merdeka Gold Resources, Bows Indonesia ($ARCI), and J Resources Asia Pacific ($PSAB) have been included in the Global Junior Gold Miners Index (GDXJ), effective March 20, 2026.

Bank Central Asia ($BBCA) reported a net profit of IDR 4.2 trillion in February 2026, a slight increase year-over-year. The bank announced a final dividend for the 2025 financial year, payable on April 8, 2026.

Astra International ($ASIA) plans a share buyback of up to IDR 2 trillion between March 16 and June 15, 2026. Insiders Prijono Sugiarto and Thomas Junaidi Alim W. Have also recently purchased shares in the company.

Merdeka Battery Materials ($MBMA) also announced a share buyback program of up to 1.8 billion shares, with a fund allocation of IDR 1.7 trillion, running from March 17 to June 16, 2026.

State Savings Bank ($BBTN) intends to increase its dividend payout ratio to 30% for the 2025 financial year, potentially yielding a 6% return based on Monday’s closing price.

Bukit Asam ($PTBA) has received approval for a 2026 coal production quota of 53.2 million tons, consistent with the 2025 quota.

Looking Ahead

The Indonesian market faces a challenging period amid rising oil prices and fiscal concerns. Investors will be closely watching developments in oil markets, government policy responses, and the performance of key sectors like coal and CPO.