Global markets ended Friday on a firmer note, with major US equity indices advancing ahead of the upcoming earnings season and key economic data releases. However, global macro risks remain elevated, as Brent crude settled near US$104/bbl amid Middle East supply concerns, while the US 10Y Treasury yield remained around 5.26%. Higher energy prices continue to raise inflation risks and could keep global interest rates elevated for longer, limiting the room for a sustained recovery in emerging-market assets.

Domestically, IHSG gained 0.94% over the week to close at 6,093.76, recovering from its recent lows. Yet the rebound remains fragile, with foreign investors recording Rp2.44tn in net selling during the week and Rp84.99tn year-to-date. The positive FTSE Russell decision earlier in the week—maintaining Indonesia’s Secondary Emerging Market status without placing it on the Watch List—has eased some immediate classification concerns. However, further improvements in ownership transparency, investor classification, and free-float standards remain important for rebuilding foreign investor confidence.

Another development to watch is Danantara’s potential participation during periods of market stress, provided valuations offer attractive investment opportunities. The fund has indicated plans to invest an additional US$1bn in domestic and international stocks and bonds by year-end, depending on market conditions. While this could provide support for selected equities, Danantara has emphasized investment returns rather than directly stabilizing the market.

Looking ahead, we expect market direction to remain sensitive to foreign fund flows, rupiah stability, and global yields, even as domestic policy initiatives offer some support. We favor selective commodity and export-oriented names with resilient earnings visibility and strong balance sheets, while remaining cautious on stocks that are more vulnerable to funding costs, currency weakness, and softer domestic demand.