Indonesian Stocks Dip as Investors Assess 2027 Budget, Global Headwinds

Indonesian Stocks Dip as Investors Assess 2027 Budget, Global Headwinds

Jakarta. Indonesian stocks edged down 0.06% to 6,118 in early trading on Wednesday as elevated energy prices and concerns over global bond yields weighed on sentiment, while investors assessed the implications of the newly approved 2027 state budget.

Data from RTI showed that 1.36 billion shares had changed hands in early trading, with a transaction value of Rp 367.86 billion ($20.55 million) across 53,041 transactions. A total of 304 stocks advanced, 151 declined and 203 remained unchanged.

Phintraco Sekuritas said the Jakarta Composite Index (JCI) closed down 0.43% at 6,121 on Tuesday, with technology stocks recording the steepest sectoral decline at 3.37%.

The index had fallen as low as 6,013 as the rupiah weakened to Rp 18,031 per US dollar. However, a subsequent recovery in the currency helped Indonesian stocks rebound from their intraday low.

Technically, the JCI formed a long lower shadow on Tuesday, indicating that buying interest emerged after the index fell sharply. However, its negative close and other technical indicators have yet to confirm a reversal, Phintraco Sekuritas said.

The brokerage expects the index to consolidate between 6,050 and 6,200 on Wednesday, while warning of increased volatility as the third quarter of 2026 draws to a close.

“Therefore, the JCI is expected to consolidate within the 6,050–6,200 range today. Investors should watch for increased fluctuations as the third quarter of 2026 comes to an end,” Phintraco Sekuritas wrote in its Wednesday research report.

Domestically, investors are also assessing the fiscal outlook after the House of Representatives passed the 2027 state budget bill into law on Tuesday. The budget maintains the proposed fiscal deficit at Rp 671.16 trillion, equivalent to 2.4% of gross domestic product (GDP). However, the government’s revenue and expenditure targets have both increased from the original budget proposal.

State revenue is now projected at Rp 3,435.10 trillion, up from the initial proposal of Rp 3,426.03 trillion. State expenditure is set at Rp 4,106.26 trillion, compared with the original target of Rp 4,097.19 trillion.

“The 2027 state budget structure indicates a relatively contained fiscal expansion. The increase in spending mainly comes from expenditure by ministries and government agencies, while transfers to regions and the primary balance target remain relatively unchanged,” Phintraco Sekuritas said.

The brokerage said the budget is expected to sustain fiscal support for domestic growth, particularly through consumption and investment. However, investors should remain mindful of available fiscal space and financing needs given the relatively large deficit.

Major spending allocations include Rp 824 trillion for education, Rp 539.7 trillion for social protection, Rp 244.9 trillion for healthcare and Rp 195.3 trillion for national food security.

Global sentiment remained mixed as conflicting signals from Federal Reserve officials, elevated oil prices and rising long-term Treasury yields continued to complicate the outlook for financial markets.

Pluang Research said Tuesday’s market movements highlighted the fragile balance between dovish signals from one Fed official and hawkish views from another on the same day.

Although comments from Fed official John Williams helped temper expectations of an interest rate hike in October and pushed short-term Treasury yields lower, long-term yields continued climbing toward their highest levels in more than two decades. Pluang attributed the pressure to a combination of elevated oil prices amid the Middle East conflict and growing investment demand related to artificial intelligence.

“A plunge in consumer confidence to its lowest level in more than 12 years adds another layer of concern about the health of the real economy, while optimism in the stock market remains constrained by euphoria surrounding Anthropic’s planned initial public offering,” Pluang said in its Wednesday report.

Wall Street closed slightly lower on Tuesday but recovered from session lows as pressure in the Treasury market eased following dovish comments from a Fed official.

The S&P 500 fell 0.17% to 7,670, while the Nasdaq Composite declined 0.09% to 26,797. The Dow Jones Industrial Average slipped 0.26% to 51,349.

In Asia, market movements were mixed as of 9:30 a.m. Jakarta time. Japan’s Nikkei 225 rose 1.27%, while South Korea’s Kospi fell 0.07%. Hong Kong’s Hang Seng Index declined 0.22%, and mainland China’s Shanghai Composite Index slipped 0.28%.

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