Indonesian Equities Rally After BI Rate Decision

Indonesian equities added 25 points, or 0.4%, to 6,325 in Friday’s morning session, clawing back ground after a sharp drop the day before as tech, cyclicals, and energy led gains. Sentiment steadied after U.S. Treasury Secretary Scott Bessent confirmed Washington and Beijing agreed to extend their trade truce through January 10, 2027. President Trump is hosting a state dinner for Chinese leader Xi Jinping, who made his first Washington visit in over a decade, with both leaders underscoring AI as a key discussion point. Early movers included Sumber Alfaria Trijaya (2.3%), Indo Tambangraya Megah (2.0%), and Surya Citra Media (1.7%). However, local markets are on track for a third straight weekly decline, down nearly 2% so far, pressured by concerns over elevated oil prices and their fiscal impact. Caution also grew ahead of next week’s August trade data and September inflation. Annual inflation accelerated to 3.19% in August, driven by steeper food costs linked to El Niño effects.

Indonesian shares slipped 42 points, or 0.7%, to 6,332 in Thursday morning trade, reversing the prior day’s rally as U.S. futures fell after Wall Street ended lower overnight amid surging U.S. Treasury yields that stoked inflation fears. Locally, economists warned that Bank Indonesia’s move in September to hold benchmark rates steady for a third month may be only a temporary pause, with external risks still elevated from higher global yields, volatile oil prices, and geopolitical headwinds. Policymakers also face challenges from slowing growth, tepid household spending, and fragile market sentiment, particularly as the rupiah remains vulnerable to renewed dollar strength and foreign outflows. Still, losses were capped by resilient loan growth, with August figures near a 12-year peak. Declines were broad-based, led by basic materials, healthcare, and property. Notable laggards included Bumi Resources (-3.1%), Pertamina Geothermal (-2.3%), and Indika Energi (-1.8%).

Indonesian stocks slipped 0.3% to 6,261 in early Wednesday trade, extending losses for a fourth straight session and notching their weakest level in six weeks. Sentiment was weighed down by FTSE Russell’s move to upgrade Vietnam to emerging-market status from frontier, spurring a rebalancing of regional flows. Caution also built ahead of Bank Indonesia’s policy decision later today, even as markets expect the benchmark rates to remain unchanged for a third month. Still, a further drop in oil prices eased inflation worries, reflecting progress in U.S.–Iran diplomatic talks and capping the market downside. President Prabowo, meanwhile, hailed the government’s completion of IDR 218 trillion in bond repayments to the central bank, closing obligations dating back to the 1997–98 Asian financial crisis. Losses were led by financials, tech, and property, with notable decliners Mitra Adiperkasa (-2.7%), Indosat (-2.1%), Alamtri Resources (-1.9%), and Indo Tambangraya Megah (-1.4%).