Indonesia Shares Under Strain, Head for Steep Weekly Drop

Indonesia’s IDX Composite dipped 82 points, or 1.4%, to 5,918 in a Friday morning session, erasing the prior day’s rally as broad-based selling gripped all major sectors. Regional weakness weighed after a mixed Wall Street close overnight, with Apple’s price hikes to offset surging chip costs adding pressure. Locally, sentiment was clouded by a provision in new legislation granting blanket legal immunity to purchase bonds issued by the state investment fund Danantara, shielding such transactions from criminal, civil, and tax probe. Losses were capped by reports that Indonesia is mulling another budget cut for Prabowo’s flagship program, easing fiscal burden. Basic materials, cyclicals, and industrials were among notable laggards, with solid losses from Jasa Marga (-7.6%), Darma Henwa (-6.7%), and Sarana Mitra Luas (-6.2%). For the week, markets are set for their first fall in three, down about 3.8%, as frontier-market downgrade risks linger despite MSCI's review delay to November.

Indonesian shares climbed 68 points, or 1.2%, to 5,953 in early Thursday trade, snapping a three-day losing streak as bargain hunters returned after the market hit a two-week low. Sentiment was buoyed by MSCI’s decision to retain Indonesia in its emerging markets index despite transparency concerns. Meanwhile, Bank Indonesia noted stronger foreign inflows into its one-year bond, called SRBI, and government bonds, with funds reaching about IDR 105 trillion so far in June. U.S. futures also edged higher as oil prices fell back to pre-war levels. However, gains were capped by caution ahead of next week’s local data releases, including June CPI and May trade figures. Meanwhile, concerns emerged over Indonesia’s 21-spot drop in the World Competitiveness Ranking. Still, all sectors advanced, led by transport, healthcare, energy, and infrastructure. Standout movers included Barito Pacific (6.6%), Indah Kiat Pulp & Paper (4.9%), Astra International (3.0%), and Sumber Alfaria Trijaya (2.5%).

Indonesian equities tumbled 140 points, or 2.3%, to 5,961 on Wednesday afternoon, reversing early strength as sentiment soured after index provider MSCI extended its reviews of Indonesia’s status until November but warned that it would “consider a range of options for the Indonesia market,” including a potential downgrade to frontier-market status. Caution also emerged as key local data will be released next week, including June CPI and May trade performance. Meanwhile, major Japanese automakers may shift production from Indonesia to Vietnam, raising concerns about investment, jobs, and factory outlook. In the U.S., a sell-off in tech names sparked deep losses on Wall Street Tuesday, ahead of PCE price index and final U.S. GDP figures later this week. Losses were broad, with infrastructure, cyclicals, and healthcare among major decliners. Bumi Resources Minerals slipped 10.9%, followed by Energi Mega Persada (-10.7%), Indika Energy (-6.4%), and Archi Indonesia (-5.6%).