June 02, 2025

Red Days Create Green Opportunities

Market Commentary

0 comments

Yesterday, the JCI dropped quite sharply, down -1.54%. Why? In our view, there are two main factors.

First, the tariff drama from Trump is once again confusing the market. One day he talks about raising tariffs, the next he wants to negotiate.

This uncertainty is making investors anxious. especially those holding stocks with export-import exposure, as it directly affects supply chains and input costs.

Second, the release of Indonesia’s April trade balance data.

The market was expecting a sizable surplus, but it came in at just USD 0.15 bn. For context, the previous month recorded a USD 4.33 bn surplus.

Even our own forecast was at USD 4.10 bn, while market consensus stood at USD 3.04 bn.

Hopefully, you had the chance to read our earlier sales notes, where we had already advised to take profits before the market turned red today.

If you locked in gains, congrats!
If not… well, let’s hope you’re not too deep in the red.

Now, while the trade balance figure may seem disappointing at first glance, there’s a silver lining.
Despite the slim surplus of only USD 0.15 bn, imports of capital goods and raw materials actually rose.

That’s usually an early indicator that investment and manufacturing activity is picking up again.

Especially since in 1Q25, investment growth was only 2.2% yoy, which dragged down overall GDP growth.

And even a small surplus is still a surplus, meaning the Rupiah still has a buffer.

From the inflation side, we also have some reassuring news.

Annual inflation for May 2025 eased to 1.60% yoy, not only well below market expectations but also the lowest level in several years.

And this isn’t just a seasonal dip.

Administered prices actually recorded deflation of -1.36% yoy, largely driven by government policy to cut non-subsidized fuel prices twice during May and early June.

So we’re not just seeing food prices fall post-Ramadan, there’s also a structural decline on the energy side.

Looking at the bigger picture:
We’re entering a rare phase, an economy with stronger growth and low inflation.

This combination hasn’t happened in the past five years.
Usually, when growth rises, so does inflation.
But now? We’re getting both: price stability and improving growth prospects.

So, for those who panicked seeing the JCI in red, take a breath.

Today’s correction was anticipated, and it could turn into an opportunity.

If the market continues to decline tomorrow, it may be the right time to start eyeing entry points again.

Because fundamentally, Indonesia’s macro landscape is beginning to improve.

And as always:
The best time to buy stocks is when others are fearful, so long as you know why you’re entering.

Comments

June 04, 2025

June 03, 2025

June 02, 2025