Indonesia Equities Under Pressure on MSCI Assessments

Indonesian shares tumbled 126 points, or 2.0%, to 6,092 in Thursday morning trade, extending the prior session’s slide as caution deepened ahead of MSCI’s Global Market Accessibility Review in early Friday and the June 23 Annual Market Classification Review, both critical for Indonesia’s benchmark status. Focus also turned to Bank Indonesia’s policy decision later today, with expectations of a hawkish stance after cumulative 75bps hikes since May to bolster the rupiah and rein in inflation. However, elevated borrowing costs risk further dampening domestic demand. Still, sentiment found some relief from a sharp rebound in U.S. futures after the Federal Reserve, under new chair Kevin Warsh, held rates steady, as expected, while signaling a more cautious policy outlook. All sectors retreated, led by financials, infrastructure, industrials, and energy. Notable laggards included Telkom Indonesia (-7.8%), Transcoal Pacific (-6.6%), Elnusa (-5.7%), and Semen Indonesia (-3.8%).

Indonesian equities retreated 55 points or 0.9% to 6,198 on Wednesday afternoon, snapping a three-session gain as energy, industry, transport, and financials weighed. Early gains faded with sentiment turning cautious ahead of MSCI’s twin evaluations: its June 18 Global Market Accessibility Review and June 23 Annual Market Classification Review, both seen as pivotal for Indonesia’s standing in global benchmarks. Fitch Ratings, meanwhile, flagged rising credit risks for local commodity exporters under the centralised export regime. Traders also braced for Thursday’s central bank decision, with policymakers expected to stay hawkish after 75bps of hikes since May to shore up rupiah and tame inflation, though higher borrowing costs risk curbing demand. In the U.S., markets awaited the first policy move under new Fed chair Kevin Warsh later today. Key laggards included Petrindo Jaya Kreasi (-6.0%), Alamtri Minerals (-3.9%), Indo Tambangraya Megah (-3.4%), and Bank Tabungan Negara (-2.7%).

Indonesia’s IDX Composite climbed 55 points or 0.9% to 6,312 in early Wednesday trade, marking a near one-month high and its third straight gain as traders returned from a holiday. Stronger U.S. stock futures boosted sentiment after Wall Street ended mixed overnight ahead of the Fed’s policy decision later today under new chairman Kevin Warsh. The central bank is widely expected to hold rates steady, with Warsh seen potentially scrapping the ‘dot plot’ to give policymakers more flexibility. A firmer rupiah also lent support, aided by hopes of Middle East peace that lifted risk appetite and pressured the U.S. dollar index. However, upside was capped after Fitch Ratings warned that local commodity exporters face higher credit risks under Indonesia’s centralized export policy. All sectors advanced, led by basic materials, non-cyclicals, infrastructure, and energy. Notable movers included Aneka Tambang (2.9%), Bank Central Asia (2.8%), Astra Agro Lestari (2.5%), and United Tractor (1%).