MXAPJ rebounded 4% amid further US-Iran de-escalation, despite broadly hawkish US and Asian central banks; we downgrade Energy and upgrade Banks in our regional sector allocation

Research evidence excerpt

MXAPJ rebounded 4% amid further US-Iran de-escalation, despite broadly hawkish US and Asian central banks; we downgrade Energy and upgrade Banks in our regional sector allocation

Goldman Sachs Asia-Pacific Weekly Kickstart

watchlist inclusion at the Annual Market Classification Review on June 23 (after US market close)

Indonesia (1 deterioration; now 2 “−”):

n The only change is Information Flow, downgraded from “+” to “−”, citing ownership opacity and coordinated trading that

“materially limit investors’ ability to assess true free float and rely on observed market prices”. FX Liberalization remains

“−”, with all other criteria unchanged.

n This formalizes previously flagged concerns rather than introducing new issues. MSCI has already frozen upward changes

and incorporated new disclosures (e.g. 1% shareholding thresholds and high ownership concentration) into the May index

review.

n View: Our base case remains that Indonesia will maintain its Emerging Market status, while FIF will be reviewed

further and adjusted downward based on the updated disclosures. The market classification review and any follow-up

consultation are key events to monitor, particularly for signals of a formal review of Indonesia’s EM status or potential

adjustments to weighting and FIF.

Charts of the Week: Lower Energy & Upgrade Banks

n Reopening of the Strait of Hormuz following last Friday’s agreement has led our oil analysts to lower their Brent oil price

forecasts to US$80 for 2026Q4 (vs. prior US$90) and US$75 for 2027 (vs. US$80), with risks seen as two-sided but

skewed to the upside. The June FOMC meeting delivered a hawkish surprise, raising the risk of rate hikes later this year,

although our US economists continue to expect rates to remain unchanged.