Smile! There's a Chance the IHSG Could Return to 8,000 by Year-End
PT Bank DBS Indonesia believes the Jakarta Composite Index (IHSG) will recover and return to the 8,000 level by the end of this year. That target is above the average analyst expectation.
William Simadiputra, Head of Research at DBS Indonesia, considers the IHSG, currently trading at around the 6,100 level, to be oversold, meaning it has come under very sharp selling pressure. This is reflected in the extremely thin trading volume and transaction value on the Indonesian stock market at present.
“And at this point, valuations have reached a level we have not seen in the last ten years, or since Indonesia first received an investment-grade rating in 2017,” William said at the DBS Institutional Forum 2026 Media Briefing at the Westin Hotel Jakarta on Wednesday (29 July 2026).
He went on to explain that corporate earnings remain positive year on year, reaching 7.5% in the first quarter. The next projection stands at around 4.4%.
“So, despite macroeconomic concerns, as long as earnings performance remains intact, valuations will be reached,” William said.
Bank DBS Indonesia projects the Price to Earnings (P/E) Ratio to reach 13x, which is below the ten-year average valuation. William then highlighted how Indonesia remains classified as an emerging market by MSCI. That status prevents further selling by index funds.
He said the next factor is the projected rupiah exchange rate of around Rp18,000 per US dollar and the stable direction of benchmark interest rate policy.
“So when confidence begins to recover with second-quarter earnings, which are currently under-reported, and the potential rotation of foreign funds, because Indonesia’s relative performance against other Asian countries is slightly lagging,” William explained.
Furthermore, he noted the dynamics of current global flows. He observed a decline in stock markets across Asia, such as South Korea, which has recently been buoyed by sentiment around AI business prospects. William cited the results of SK Hynix Co. Ltd., which missed market estimates.
“So we are starting to see overheating in the South Korean market. So perhaps that puts Indonesia in an advantageous position,” William said.
With the IHSG having fallen around 29% so far this year, there is a gap of roughly 50% against other markets that have risen more than 20%. William believes that, with strong fundamentals and the direction of policy ahead, Indonesia is in an advantageous position compared with other countries that have already surged ahead.