At the same time, Bank Indonesia held its BI-Rate at 4.75%, prioritizing rupiah stability amid heightened geopolitical uncertainty. BI continues its accommodative stance through liquidity support and fiscal-monetary coordination, while stepping up FX intervention. We see BI effectively deploying an operation twist strategy, tightening short-end liquidity while anchoring long-end yields, supporting a flatter yield curve and sustaining the attractiveness of both bonds and equities. While the rupiah remains a key risk, we expect a managed and gradual depreciation, supported by improving terms of trade.
In this environment, markets are likely to remain highly selective, with flows concentrating on names with strong fundamentals and high liquidity. We continue to favor the banking sector as a core positioning, supported by resilient earnings, solid balance sheets, and defensive characteristics amid volatility.
As a complement, tactical exposure can be considered in sectors benefiting from geopolitical developments. Buana Lintas Lautan Tbk (BULL) stands out as a direct beneficiary of disruptions in the Strait of Hormuz, given its exposure to spot tanker rates. Combining a defensive core in banks with tactical positioning in shipping offers a balanced strategy to capture upside while navigating ongoing market volatility.