July 14, 2025
Lower Yield, Stronger Rally Ahead

Market Commentary
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As of mid-2025, the JCI has declined slightly by 0.46% YTD standing at 7,047.44. The index reached a peak of 7,257.13 earlier in the year but experienced a significant dip to 5,967.99 before gradually recovering.

Early-year global uncertainty, including shifts in U.S. interest rate expectations and geopolitical tensions, triggered outflows from emerging markets including JCI.

Domestically, the Indonesian market faced pressure from the large number of IPOs that absorbed liquidity.
 
JCI YTD Performance

The landscape for Indonesian equities may be shifting favorably, signaling a potential rally in the JCI.

Historically, the JCI tends to move inversely to the 10-year government bond yield—and that relationship appears to be reasserting itself. As shown in the chart, the 10-year yield (white line) has been declining recently, while the JCI (blue line) is beginning to climb again after a volatile first half of 2025.
 
Indonesia 10 Year Bond Yield (wihte) vs. JCI (blue)


This softening in yields is also confirmed in the latest SRBI auction results:

The 1-year SRBI attracted strong demand, absorbing IDR 24.3tn with an average yield of 5.87%, slightly lower than previous levels.

Shorter tenor SRBIs also showed moderation in yields, reflecting easing pressure on interest rates.
 

The combination of declining bond yields and strong SRBI participation suggests improving liquidity conditions and a return of risk appetite. With the macro backdrop stabilizing and monetary pressure easing, the JCI could be on the verge of a renewed rally in the second half of 2025.

However, we noticed that US Treasury yield remains high and that it is likely to hamper the flow from the US towards emerging market such as Indonesia.

US 10 Year Treasury Yield

All things considered, we believe investors may need to stay invested despite the uncertainties going on globally. We believe that the global appetite for US Treasury bill has declined and that sooner or later the equity market is likely to experience a rally should the bond yield decline, as seen from the history.
 

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