IHSG Rises, Tracking Gains in Asian and Global Markets

The Indonesian Stock Exchange (IDX) Composite Index (IHSG) moved higher on Friday morning, tracking gains in Asian and global stock markets. The IHSG opened up 61.61 points, or 1.07 percent, at 5,806.17. Meanwhile, the LQ45 index of 45 leading stocks rose 6.97 points, or 1.23 percent, to 572.46. Head of Research at Kiwoom Sekuritas, Liza Camelia Suryanata, noted that as long as the IHSG remains below 5,762-5,853, it risks further weakening towards support at 5,678, and subsequently 5,607-5,523. Conversely, if it manages to break through 5,762 or 5,806 and continues above 5,853 with increased transaction volume, the IHSG has the opportunity to test resistance at 5,904, then 5,974, up to the psychological area of 6,000. Globally, Asian and international markets strengthened as geopolitical tensions in the Middle East continued to ease, following progress in peace talks between the United States and Iran, which is encouraging the normalisation of shipping activity in the Strait of Hormuz. This condition helps maintain global energy supply stability and eases pressure on oil prices and inflation expectations. Positive sentiment was also triggered by Federal Reserve Governor Kevin Warsh, who stressed that the Fed would no longer provide explicit forward guidance in determining its monetary policy direction. Warsh also noted that inflationary risks are subsiding as oil prices fall, giving the Fed room to maintain interest rates without the need for further tightening if economic conditions remain stable. Additionally, investors responded positively to US employment data that was weaker than expected, reducing the probability of a Fed rate hike this year. Domestically, the House of Representatives and the government have agreed on the initial framework for the 2027 State Budget, targeting state revenue at 12.01-12.40 percent of GDP, with a tax revenue ratio of 10.16-10.50 percent of GDP, while the deficit is maintained in the range of 1.80-2.40 percent of GDP and the debt ratio is projected at 40.31-40.64 percent of GDP. The government has also set an economic growth assumption of 5.8-6.5 percent, inflation at 1.5-3.5 percent, an exchange rate of Rp16,800-Rp17,500 per US dollar, and an Indonesian Crude Price of 70-95 US dollars per barrel. On another front, the government is accelerating the establishment of the Indonesian International Financial Centre through a bill offering incentives such as tax exemptions and the implementation of an international-standard commercial legal system, adopting best practices from global financial hubs like Dubai and Abu Dhabi. The centre will operate as a special enclave with a dedicated court for international business dispute resolution, supported by facilities in taxation, licensing, immigration, employment, and residency to enhance foreign investment appeal and strengthen Indonesia’s position as a regional financial centre.