27 April 2026
Changing JCI Investor Participation Favors Alpha Stocks
Market Commentary
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From 2 January 2025 to 27 April 2026, the JCI continued to outperform both the LQ45 and IDX30 indices, remaining relatively resilient at around -0.8% compared to declines of 11.6% and 18.0%, respectively. This divergence underscores the uneven performance within the Indonesian equity market over the period.
The outperformance is largely attributable to sustained retail participation in second- and third-tier stocks, while foreign investors have continued to reduce exposure, particularly in large-cap names. As a result, indices with higher blue-chip concentration, such as LQ45 and IDX30, have come under greater pressure, highlighting the current split between domestically driven flows and weaker offshore sentiment.
From 2 January 2025 through 24 April 2026, foreign investors have recorded cumulative net capital outflows of more than IDR 60tn from the Indonesian equity market, reflecting a notable deterioration in external sentiment toward domestic assets. The sustained selling suggests that international investors have become increasingly cautious on Indonesia relative to regional peers.
In our view, the outflows have been driven not only by global risk aversion, but also by fading confidence in Indonesia’s macroeconomic outlook and the consistency of government policy direction. Concerns over growth momentum, fiscal discipline, regulatory predictability, and policy execution appear to have weighed on investor conviction, particularly among long-only institutional funds with a strong focus on stability and governance.
Given the still-limited appetite from foreign investors, market leadership is likely to remain concentrated in alpha opportunities and second- to third-tier stocks over the medium term. With offshore flows largely absent from blue-chip names, domestically driven liquidity may continue to favor smaller and more tactical counters, which typically respond faster to retail participation, thematic momentum, and company-specific catalysts than larger capitalization stocks.
The outperformance is largely attributable to sustained retail participation in second- and third-tier stocks, while foreign investors have continued to reduce exposure, particularly in large-cap names. As a result, indices with higher blue-chip concentration, such as LQ45 and IDX30, have come under greater pressure, highlighting the current split between domestically driven flows and weaker offshore sentiment.
From 2 January 2025 through 24 April 2026, foreign investors have recorded cumulative net capital outflows of more than IDR 60tn from the Indonesian equity market, reflecting a notable deterioration in external sentiment toward domestic assets. The sustained selling suggests that international investors have become increasingly cautious on Indonesia relative to regional peers.
In our view, the outflows have been driven not only by global risk aversion, but also by fading confidence in Indonesia’s macroeconomic outlook and the consistency of government policy direction. Concerns over growth momentum, fiscal discipline, regulatory predictability, and policy execution appear to have weighed on investor conviction, particularly among long-only institutional funds with a strong focus on stability and governance.
Given the still-limited appetite from foreign investors, market leadership is likely to remain concentrated in alpha opportunities and second- to third-tier stocks over the medium term. With offshore flows largely absent from blue-chip names, domestically driven liquidity may continue to favor smaller and more tactical counters, which typically respond faster to retail participation, thematic momentum, and company-specific catalysts than larger capitalization stocks.
Written by Boris, the Broker
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