Indonesian stocks enter bull market after June low as MSCI reprieve lifts sentiment

Indonesian equities have climbed into bull-market territory after slumping to a five-year low in early June, helped by bargain valuations, support from local regulators and a gradual return of foreign investors. The Jakarta Stock Exchange Composite Index is still down about 29% year-to-date, but has risen more than 10% from last month's trough, according to LSEG data. Sentiment also improved after S&P Global Ratings reaffirmed Indonesia's BBB sovereign rating with a stable outlook a couple of weeks ago. Investors had been rattled for much of 2026 after MSCI questioned governance across many Indonesian stocks and said it would consider cutting the market's status to frontier from emerging. Concerns included low free floats (shares available for public trading) and concentrated ownership. MSCI's eventual decision not to proceed with a downgrade was described by Capital Economics as a major relief that helped stop panic selling. Market participants say the rebound also reflects a rotation into cheaper markets as investors took profits from expensive AI and technology shares elsewhere. Kiwoom Sekuritas Indonesia said Indonesian equities had become too cheap to ignore after months of heavy selling, while Moody's Analytics pointed to regulatory steps requiring a higher minimum free float and tighter ownership disclosure to address thin liquidity and transparency concerns. Kiwoom also said easing fears over fiscal risks, after stronger-than-expected government revenue and a recovery in tax collections in the first half, added to the improvement.