IDX Remains Vulnerable to Pressure Amid High Interest Rates, Analysts Suggest

The Indonesia Stock Exchange (IDX) remains overshadowed by pressure amidst the era of high interest rates and heavy foreign capital outflows. The index has recorded a correction of 36.04% from its all-time high of 9,174.47 on 19 January 2026. Year-to-date, the index has also weakened by approximately 29.14% to the 5,594 level.

Simultaneously, foreign investors have recorded a net sell of Rp 61.3 trillion in accumulation, including Rp 13.78 trillion within the past week. “In the short term, the IDX still has the potential to move volatiles with a tendency to be pressured due to global sentiment and the large volume of foreign capital outflows,” an analyst told Kontan on Sunday (7/6/2026).

However, the analyst noted that opportunities for a technical rebound are beginning to open up following the significant correction. “After a correction of more than 36% from the ATH, the chance for a rebound is increasing, especially if selling pressure begins to subside,” they added.

Budi explained that current high interest rates are one of the primary factors weighing on the stock market. Investors tend to shift funds to safer instruments such as deposits and bonds. “High interest rates make alternative investments in deposits and bonds more attractive, while corporate funding costs also increase. This encourages stock valuations to undergo adjustments,” he explained.

“Global investors are currently more selective regarding emerging markets. Consistent inflows are likely to occur only if global sentiment improves, the Rupiah stabilises, and confidence in the domestic market increases,” he said.

In this pressured market condition, Budi advised investors to be more cautious in formulating strategies. Investors are advised to avoid using debt or margin, maintain liquidity, and accumulate gradually in stocks with strong fundamentals. “The focus should be on the quality of the issuer, not merely on the fact that the price has dropped significantly,” he emphasised.

He also assessed that defensive sectors remain relatively attractive amidst uncertainty, such as telecommunications, healthcare, and consumer staples. Furthermore, stocks with strong balance sheets, stable cash flows, and attractive dividend yields are considered more resilient to market pressure. According to him, these factors will be more decisive for the direction of the IDX in the short term than the individual performance of issuers. Investors are also urged to remain vigilant regarding global and domestic dynamics to anticipate the ongoing high market volatility.