Mirae says Indonesian stock market prospects supported by valuations and MSCI status

The recovery of foreign investor interest in large-cap banking stocks is a positive signal for the Indonesian stock market, according to PT Mirae Asset Sekuritas Indonesia (MASI). Head of Research and Chief Economist Rully Arya Wisnubroto stated that market direction in the second half of 2026 will be determined by global macroeconomic conditions, increasingly attractive stock valuations, and the maintained status of Indonesia as an Emerging Market in the MSCI index. “After the technical rebound phase, investor attention will increasingly focus on the quality of economic fundamentals, the direction of global monetary policy, and the ability of issuers to sustain performance growth,” Rully said in Jakarta on Tuesday. He noted that the main challenge for the Indonesian stock market in the second half of 2026 will still stem from global monetary policy. Mirae projects the US Federal Reserve will raise its benchmark interest rate by 25 basis points each in September and December 2026. “The higher-for-longer condition makes US dollar liquidity tighter, putting pressure on the Rupiah exchange rate. Amid an economic slowdown and the potential for a twin deficit, Bank Indonesia’s room to raise interest rates further is also limited,” Rully explained. Research Analyst Wilbert Arifin added that the MSCI decision to retain Indonesia’s Emerging Market status reduces market uncertainty, even though the country remains under review for potential reclassification. “Net foreign outflow is still dominated by index-linked funds, while strategic investors maintain their exposure to large-cap banking stocks. With market valuations at their lowest level in a decade and the potential for an unfreeze of Indonesia’s MSCI index inclusion, the opportunity for a return of foreign fund flows to the domestic stock market remains open,” Wilbert said. He concluded that investor focus in the second half of 2026 will be on Indonesia’s ability to maintain macroeconomic stability, enhance capital market attractiveness, and drive corporate earnings growth.