IHSG Plummets in 2026, Worst Globally as Foreign Investors Flee

Indonesian stock market index (IHSG) has recorded a deeply concerning performance year-to-date in 2026. Massive selling pressure from foreign investors has dragged the benchmark index to its lowest level, making it the worst-performing major global stock index.

Lack of positive domestic sentiment combined with external volatility has eroded the appeal of Indonesia’s equity market to foreign investors.

Year-to-date performance as of 29 May 2026 shows IHSG down 29.14%, the lowest among major global indices. In contrast, the US S&P 500 has risen 9.92% since end-December 2025, while Asian markets like South Korea’s KOSPI and Taiwan’s TWII have posted strong gains.

Daily trading data shows eight consecutive trading days of decline between 8-21 May 2026, confirming the absence of domestic institutional buying power to counter aggressive selling.

Since January 2026, the IHSG has fallen every month without a single positive close, a historic first.

Foreign net outflow totalled Rp53.71 trillion year-to-date, with Rp8.5 trillion withdrawn on 29 May alone. This has strained market liquidity and eroded valuations of large-cap stocks.

An MSCI index rebalancing effective 1 June 2026 is expected to worsen the situation, with anticipated outflows of tens of trillions of rupiah. Given MSCI’s review has frozen the Foreign Inclusion Factor (FIF) ratio for Indonesian issuers, the constituent changes will weigh on the IHSG. Under passive fund management fundamentals, when a stock is removed from an index, global fund managers must sell those shares. However, with the FIF frozen, Indonesian shares remaining in the index cannot receive the capital from these sales. Consequently, the liquidity from selling must be fully withdrawn and reallocated to other emerging markets. This operational mechanism heightens the certainty of further massive net outflows, potentially deepening market pressure.