MAMI: Why Asia Pacific Markets Remain Attractive as Indonesia Loses Momentum
As global markets remain overshadowed by interest rate uncertainty and geopolitical risks, Manulife Aset Manajemen Indonesia (MAMI) sees attractive investment opportunities in the Asia Pacific region. According to MAMI, the region possesses stronger growth foundations than many other markets, supported by the artificial intelligence (AI) sector, semiconductors, and capital expenditure by global technology companies.
In the June 2026 edition of its Seeking Alpha market review, Caroline Rusli, CFA, Senior Portfolio Manager Equity at MAMI, explained that market expectations regarding the direction of monetary policy have shifted drastically in recent months. At the end of 2025, the market expected the Federal Reserve to cut the Fed Funds Rate by 50 basis points in 2026; now, expectations have reversed to a potential increase of around 20 basis points.
A similar shift has occurred in Indonesia. Bank Indonesia raised the BI Rate by 50 basis points in May 2026 and again by 25 basis points in early June. According to Caroline, the combination of monetary tightening, rising bond yields, a weakening rupiah, and growing concerns over fiscal conditions has dampened investor appetite for risk assets.
Nevertheless, MAMI assesses that the Indonesian stock market is already at an attractive valuation level. The challenge is that foreign investors are still waiting for stronger catalysts before re-entering aggressively. Therefore, a selective approach through fundamental-based stock and sector selection is deemed a more relevant strategy at present.
In contrast to Indonesia, which is still seeking short-term catalysts, North Asia is seen as having clearer growth support. The region is one of the biggest beneficiaries of AI development and the increasing need for global digital infrastructure. Technology giants such as Amazon, Google, Meta, and Microsoft continue to increase capital expenditure to build data centres, computing capacity, and AI infrastructure. The impact flows through to Asia’s supply chain, from semiconductor producers and electronic components to technology materials. According to MAMI, Asia’s current strength is not merely due to relatively attractive valuations, but also because it is supported by corporate earnings growth with long-term structural catalysts.
MAMI is also monitoring the flow of foreign funds into Asia, which remains quite volatile. At the end of 2025, foreign fund flows into emerging Asian markets reached approximately US$229 billion. This figure then dropped sharply to around US$64 billion before recovering to the range of US$113 billion. Although fund flows have not returned to their peak, Asian markets have still managed to record relatively strong performance. This indicates that market strengthening is no longer solely supported by global liquidity, but also by better corporate fundamental prospects.
MAMI considers the Asia Pacific strategy suitable as a core allocation in an overseas investment portfolio because it provides exposure to various sources of economic growth in the region. Meanwhile, a strategy more focused on China can serve as a satellite allocation for investors with a higher risk tolerance. Although China’s economy still faces challenges, the country retains an important position in the global manufacturing supply chain and has the potential to receive a sentiment boost if economic growth stabilises.
Amid changes in global monetary policy direction and geopolitical uncertainty, MAMI believes the Asia Pacific region still offers attractive investment opportunities. Support from the AI cycle, the semiconductor industry, and increased capital expenditure by global technology companies are the main factors distinguishing this region from many other markets. However, investors still need to pay attention to the risks of more aggressive interest rate hikes, geopolitical conflicts, and the potential for short-term corrections in markets that have already experienced significant gains.