Indonesia Market Strategy: Macro stability supports selective opportunities

Research evidence excerpt

Indonesia Market Strategy: Macro stability supports selective opportunities

Global Research

8 July 2026ab

Indonesia Market Strategy Equity Strategy

IndonesiaMacro stability supports selective opportunities

Joshua Tanja, CFA

Analyst

Lower year-end 2026 index target to 7,050; maintain defensive stance joshua.tanja@ubs.com

+62-21-2554 7030

Positive macro developments (higher rates, fiscal policy progress and softer mining

sector policies) may ease depreciation pressures on the rupiah in H2 (full report here), Ivan Reynaldo Sutheja

Analystpaving the way for some PE re-rating following a major derating from 12x to 8x in less

ivan-reynaldo.sutheja@ubs.com

than a year. Notably, June had Rp44trn of net foreign inflows into SRBIs and government +62-21-2554 7037

bonds versus Rp28trn of equity outflows. We cut our index target to 7,050, implying

9.5x 12-month forward PE. We are positive on resources (nickel, aluminium and copper), Elisabeth Angelina Inggriani

Associate Analyst

telecom and staples. Key large-cap top picks are BBCA, TLKM and AMMN.

elisabeth-angelina.inggriani@ubs.com

+62-21-2554 7006

We see upside risk to market PE on recent positive macro developments

1) Policymakers have demonstrated a willingness to prioritise macro stability over

growth: The 100bp increase in the BI policy rate since May underscores a commitment

to maintaining attractive carry and containing depreciation pressure. This has supported

fixed-income inflows, with Rp44trn of net foreign purchases in SRBIs and government

bonds in June. 2) Progress on fiscal policy, including a 32% cut to the free lunch

programme, with further cuts expected in 2027F, alongside strong 21% YoY revenue

momentum in H126 and 0.7% H126 deficit, has eased concerns over fiscal slippage. 3)