Jakarta Composite Index Rebounds Following Market Reform Plans
The Jakarta Composite Index rebounded 4.9 percent to 5,439.258 in the week ended Oct. 23, according to Indonesia Stock Exchange data cited by the Jakarta Globe. The recovery lifted the exchange’s total market capitalization by 4.66 percent to Rp 9,583 trillion ($529.6 billion), up from Rp 9,157 trillion the previous week. Average daily transaction value increased 25.42 percent to Rp 20.34 trillion.
Foreign investors continued offloading Indonesian equities. They sold a net Rp 1.28 trillion on Friday alone, bringing cumulative net selling for 2026 to Rp 94.87 trillion, the Jakarta Globe reported. Pilarmas Investindo Sekuritas stated that planned capital market reforms supported the weekly rebound.
Index Calculation Changes Target Ownership Concentration
The Indonesia Stock Exchange plans to exclude stocks with highly concentrated share ownership from the Jakarta Composite Index calculation starting Nov. 2. Pilarmas Investindo Sekuritas noted that the regulatory adjustments follow MSCI warnings that Indonesia risks a downgrade from emerging-market status to standalone-market status.
Regulators face pressure to improve market transparency and address concentrated ownership. BRI Danareksa Sekuritas warned that a downgrade could trigger further active fund outflows. Foreign investors already sold roughly $6 billion in Indonesian equities between January and October.
The brokerage estimated potential foreign outflows between $4.3 billion and $13.1 billion under various scenarios, citing a base-case estimate of $7.5 billion. Conversely, BRI Danareksa Sekuritas estimated that every 1-percentage-point increase in domestic institutional equity allocation could generate approximately $1.1 billion in buying. The firm lowered its end-2026 Jakarta Composite Index target to 6,000 from 7,200, while setting an end-2027 level of 7,600.
Danantara Investment Could Support State-Owned Enterprise Shares
Potential investment by Danantara, Indonesia’s sovereign investment agency, could support shares of state-owned enterprises, according to Pilarmas Investindo Sekuritas. Sustained buying and improving corporate performance could strengthen sentiment toward listed state-owned companies, though Pilarmas cautioned that rally sustainability depends on actual investment realization and corporate fundamentals.
Meanwhile, Bank Indonesia maintained its benchmark BI-Rate at 5.75 percent, its lending facility rate at 6.50 percent, and its deposit facility rate at 5.00 percent. The central bank kept rates firm to support the rupiah amid geopolitical risks. Reports regarding potential U.S. and Israel actions against Iran following U.S. midterm elections added regional risk concerns for investors.