Indonesian stocks near record high, unfazed by foreign selling

[JAKARTA] Indonesian stocks are closing in on an all-time high as booming domestic demand offsets a deluge of foreign outflows.

Foreign investors have sold a net US$3.8 billion in local shares so far this year, on track for their largest annual outflow ever, according to Bloomberg-compiled data. Despite the exodus, the Jakarta Composite Index has rallied 26 per cent from an April low and is approaching its record high set in September.

The disconnect between foreign selling and the benchmark’s advance highlights Indonesian equities’ waning reliance on overseas investors. Local retail participation and demand for stocks linked to billionaires, such as Prajogo Pangestu’s Barito Renewables Energy, are supporting the South-east Asian country’s shares, outweighing concerns over global trade.

“Domestic investors are backing a new generation of winners,” said Mohit Mirpuri, a fund manager at SGMC Capital. “If this trend holds, a fresh record high could just be the beginning” for Indonesia’s equity gauge.

The number of local retail investors has ballooned to 17 million in 2025 from just 3.8 million five years ago, according to the Indonesia Stock Exchange. Meanwhile, foreign ownership in the nation’s stocks has shrunk to about 40 per cent, down from more than 57 per cent a decade ago, Indonesia Central Securities Depository data show.

A string of successful initial public offerings from companies such as infrastructure firm Chandra Daya Investasi have re-energised local investors, Mirpuri said. Its shares have climbed 837 per cent since their listing last month. He also points to Barito Renewables, whose stock has soared more than 800 per cent since its 2023 debut. Both companies are tied to Pangestu.

Falling government bond yields are also prompting domestic investors to seek stocks and other assets offering higher returns, according to analysts. Indonesia’s benchmark 10-year yield has declined by more than 50 basis points this year to 6.5 per cent.

A softer US dollar, prospects for further interest-rate cuts by Bank Indonesia and greater certainty over global trade could lure foreign investors back, said Rajeev De Mello, global macro portfolio manager at Gama Asset Management. US President Donald Trump’s decision to impose a 19 per cent levy on Indonesian imports, down from the 32 per cent rate he initially threatened, has also buoyed sentiment.

Still, foreign investors could keep dumping the nation’s stocks if corporate earnings disappoint, said Aldo Perkasa, head of research at Trimegah Sekuritas Indonesia. He sees the country’s benchmark ending the year at 7,750 points, 3.1 per cent above on Tuesday’s close. BLOOMBERG