Indonesian Stocks Drop Sharply Amid Inflation and Trade Concerns

Indonesia’s IDX Composite fell 70 points, or 1.4%, to 5,028 in early Tuesday trading, reversing gains in the prior day amid broad-based losses across major sectors, led by energy, infrastructure, basic materials, and property. Sentiment weakened as October food inflation hit a five-month high, due to lingering El Niño-related supply disruptions, despite a slight easing in headline inflation that kept it within the central bank’s target range. Meanwhile, the trade surplus faces continued pressure as imports outpace exports, despite a stronger-than-expected reading in September. In the U.S., stock futures were mixed ahead of the midterm elections and key data releases. Still, losses were limited by a major bourse reform excluding 81 stocks with high shareholding concentration from benchmark index calculations, in response to MSCI's warnings over potential market reclassification. Notable laggards included Medco Energi (-5.1%), Telkom Indonesia (-4.3%), and Bank Tabungan Negara (-3.4%).

Indonesian shares climbed 44 points, or 0.9%, to 5,113 on Monday afternoon, reversing early losses as sentiment improved amid stronger U.S. stock futures and falling oil prices following reports of renewed U.S.-Iran diplomatic efforts to ease Middle East tensions. Traders also eagerly anticipate further corporate earnings, U.S. jobs data, and the upcoming midterm elections. Locally, sentiment was lifted by a stronger-than-expected September trade surplus, as exports grew more than forecast while imports unexpectedly slowed. Meanwhile, the Indonesian bourse officially implemented a major reform, excluding 81 stocks classified as having High Shareholding Concentration from benchmark index calculations. The measure was fast-tracked in response to MSCI warnings over potential market reclassification. Most sectors advanced, led by basic materials, energy, and infrastructure. Top movers included Darma Henwa (10.3%), Bumi Resources (9.2%), Indika Energy (8.4%), and Merdeka Battery (6.7%).

Indonesian stocks fell 39 points, or 0.8%, to 5,022 on the first trading day of a new month, extending losses for a third session. Caution prevailed ahead of September trade and October inflation data due later today. In August, imports continued to outpace exports, highlighting external risks, particularly from Middle East tensions. Meanwhile, September inflation accelerated to a three-month high of 3.28% amid El Niño-related food price pressures. Still, gains in U.S. equity futures limited the fall ahead of further earnings reports, jobs data, and the midterm elections. Meanwhile, factory activity in Indonesia grew the most since March 2024, as output, new orders, and foreign demand all rose. Regionally, China's central bank shifted its short-term monetary policy framework toward the overnight rate, signaling a move closer to the operating systems of major central banks. Among the biggest laggards were Adaro Andalan Indonesia (-6.5%), Mitra Adiperkasa (-5.7%), and Bukit Asam (-3.1%).