Smile! There's a Chance the IHSG Could Return to 8,000 by Year-End

PT Bank DBS Indonesia is confident the Jakarta Composite Index (IHSG) will recover and return to the 8,000 level by the end of this year. This target is above the average analyst expectation. Head of Research at DBS Indonesia, William Simadiputra, assessed that the IHSG, currently around the 6,100 level, is oversold, having experienced very sharp selling pressure. This is reflected in the currently very thin trading volume and value in the Indonesian stock market. “And at this point, valuations have reached a point we haven’t seen in the last 10 years, or since Indonesia first received its investment grade rating in 2017,” William said during the DBS Institutional Forum 2026 Media Briefing at the Westin Hotel Jakarta on Wednesday (29/7/2026). He then explained that corporate earnings remain positive year-on-year, reaching 7.5% in the first quarter. The next projection is around 4.4%. “So, regardless of macroeconomic concerns, as long as earnings performance is maintained, the valuation will be achieved,” William stated. Bank DBS Indonesia projects the Price To Earnings Ratio (P/E) will reach 13x, or below the 10-year average valuation. William then highlighted how Indonesia remains in the emerging market classification within the MSCI index. This determination prevents further selling by index funds. He mentioned the next factor is the projection for the rupiah exchange rate to be around Rp18,000 per US dollar and the stable direction of the benchmark interest rate policy. “So when confidence begins to recover with second-quarter earnings, which are currently underreported, and the potential for rotation from foreign funds, because Indonesia’s relative performance against other Asian countries is slightly lagging,” William explained. Furthermore, he noted the current dynamics of global flows. He observed a decline in Asian stock markets, such as South Korea, which had recently been supported by sentiment on AI business prospects. William cited the example of SK Hynix Co. Ltd.’s performance report missing market forecasts. “So we are starting to see overheating in the South Korean market. So, that might put Indonesia in a favourable position,” William revealed. With the IHSG having plunged around 29% year-to-date, there is a gap of about 50% with other markets that have moved up more than 20%. William assessed that, with strong fundamentals and future policy direction, Indonesia is in a favourable position compared to other countries that have already surged ahead.