Foreign Investors Flee as IHSG Predicted to Remain in Fragile Phase

JAKARTA — The Indonesian Stock Exchange Index (IHSG) remains in a fragile phase due to high sensitivity to external and domestic sentiment.

The IHSG closed up 1.10% at 6,162.045 on Friday, 22 May 2026.

Despite the gain, the index remains vulnerable to a correction on Monday, 25 May 2026.

Hendra Wardana, market analyst and founder of Republik Investor, said the IHSG’s rise last Friday was largely driven by buying in cyclical and commodity stocks.

These include PT Merdeka Copper Gold Tbk (MDKA), PT Vale Indonesia Tbk (INCO), and PT Barito Pacific Tbk (BRPT).

Meanwhile, the banking sector, which has traditionally been the backbone of the IHSG, remains under pressure.

“This indicates the index’s strength is not yet solid as it lacks broad-based large-scale capital inflows,” Hendra told Kompas.com on Sunday, 24 May 2026.

These factors include inconsistent government policies, fiscal uncertainty, the rupiah’s weakness at Rp 17,700 per US dollar, and growing foreign investor concerns over Indonesia’s market risks.

The market also faces global pressures from US-Iran tensions and rising global oil prices.

According to Hendra, the market needs certainty and stability, but current policy directions are causing confusion.

Hendra identified several key factors that could pressure the IHSG in the short term.

One is the rise in global oil prices back above $100 per barrel due to threats of the Strait of Hormuz closure.

This situation is deemed dangerous for Indonesia as it could widen the current account deficit, increase energy subsidies, and drive inflation.

The market is now anticipating that the US Federal Reserve (The Fed) will not cut interest rates this year.

This has led foreign funds to prefer holding US dollar assets over entering emerging markets like Indonesia.

“This means foreign funds will continue to opt for US dollar assets rather than emerging markets such as Indonesia,” he added.