Global flows into Southeast Asia are showing early signs of reallocation, as BlackRock plans to launch a new fund focused on large-cap ASEAN equities. The initiative aligns with Singapore’s broader effort to enhance market liquidity, with the fund expected to allocate a significant portion—at least 50%—to Singapore at the initial stage, while maintaining an underweight position in Indonesia. The strategy will be benchmarked against the MSCI ASEAN Index and tilted toward value, yield, and momentum, with a focus on large-cap names.

This development comes alongside Singapore’s ongoing push to strengthen its capital markets, including allocating substantial funds to both domestic and global asset managers. The objective is clear: attract liquidity, deepen market participation, and improve the overall competitiveness of its equity market. In contrast, Indonesia continues to face near-term sentiment pressures, reflected in recent market volatility and cautious foreign positioning.

The implication for Indonesia is not necessarily negative, but rather highlights a relative positioning challenge in the short term. With global funds showing a preference for markets with stronger liquidity and policy clarity, capital allocation may remain selective. As a result, flows into Indonesia are likely to concentrate on large, liquid names that offer both stability and visibility, rather than smaller or less liquid segments.

In this environment, big banks stand out as key beneficiaries. Their strong fundamentals, deep liquidity, and consistent earnings profile position them as primary targets for both domestic and foreign investors. As market conditions stabilize, accumulation in high-quality banking names offers a more defensive yet strategic way to capture potential upside, especially amid ongoing global rotation and selective risk appetite.
 

As we expected, sector earnings to return to high single- to double-digit growth in 2026–27F. Within this, our preference remains with large-cap banks BBCA, BMRI, and BBRI, which offer the best combination of balance sheet strength, earnings visibility, and valuation upside.