PT Samuel Sekuritas Indonesia predicts that the domestic capital market turmoil triggered by the Morgan Stanley Capital International (MSCI) index issue has now passed its most difficult phase. Entering the second half of 2026, stock valuations in Indonesia are considered attractive again for investors seeking strategic entry points following the sharp correction that previously occurred.
However, Managing Director of PT Samuel Tumbuh Bersama, Tae Yong Shim, emphasized that market participants must not lower their guard. Although global sentiment pressure is beginning to subside, structural risks regarding Indonesia's status in the index continue to loom. Crucial aspects such as issuer transparency, public float share, and general market attractiveness remain under strict scrutiny by the MSCI committee.
There are genuine concerns that a downgrade in issuer governance ratings could trigger a downgrade of the IHSG's status from an emerging market to a frontier market. If this scenario occurs, Indonesia risks massive foreign capital flight, which would exert significant pressure on the stability of the domestic stock exchange.
On the other hand, challenges for the stock market are exacerbated by restrictive domestic monetary policy. Bank Indonesia's decision to raise the benchmark interest rate by 100 basis points to 5.75% to stabilize the rupiah has narrowed room for economic growth. This increase in the cost of funds is beginning to weigh on issuers' fundamental performance, especially in the banking sector, which serves as the primary engine driving the main index.
Considering the combination of global governance uncertainty and challenging macroeconomic conditions, Samuel Sekuritas advises investors to adopt a defensive strategy. This move is considered safer than taking aggressive positions amid the volatility that could still potentially persist until the end of the year.
