The Flying Dutchman: Indonesia: Underweight despite the deep discount

Research evidence excerpt

The Flying Dutchman: Indonesia: Underweight despite the deep discount

22 June 2026

The Flying Dutchman EquityAsia Strategy

Indonesia: Underweight despite the deep discount

◆ Indonesian equities have fallen back to 1997 Asian financial Herald van der Linde*, CFA

crisis levels in USD terms as FX weakness weighs on returns Head of Equity Strategy, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited

heraldvanderlinde@hsbc.com.hk

◆ Despite cheap valuations and equity fundamentals largely +852 2996 6575

stable, we stay underweight due to the macro headwinds… Prerna Garg*

Asia Equity Strategist

The Hongkong and Shanghai Banking Corporation Limited

◆ …along with the currency weakness, policy uncertainty, and prerna.garg@hsbc.com.hk

investor concerns over a potential MSCI downgrade +852 9831 6901

Adam Qi*

Associate, Equity Strategy

Déjà Vu. Commodity prices are trading at an all-time high, Indonesia’s central bank is The Hongkong and Shanghai Banking Corporation Limited adam.x.l.qi@hsbc.com.hk

raising rates, which helps banks’ margins; on the face of it, Indonesian equities +852 2288 9311

should benefit. However, the Indonesian market has been the worst-performing Varun Pai*

equity market in Asia year to date. In USD terms, it is currently trading at the same Associate Bangalore

level as it was back in 1997, during the height of the Asian financial crisis. Concerns

over the direction of FX, macroeconomic headwinds, and policy uncertainties have * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

cast a shadow over investor confidence in the region. not registered/ qualified pursuant to FINRA regulations

Policy concerns. There are widespread concerns among investors around the

clarity and effectiveness of policy directives in Indonesia.