Foreign Buying Resurges, Signaling Confidence in Indonesian Market
The Indonesia Stock Exchange (IDX) has witnessed a significant reversal in capital flows over the past month, marked by a resurgence of foreign buying that totaled nearly Rp 13 trillion (approximately $777.5 million) in net purchases.
This strong inflow follows an extended period characterized by continuous outflows, indicating a crucial shift in sentiment among international investors.
IDX President Director Iman Rachman shared this positive development, noting that while the year-to-date figures still show net sales of Rp 41.8 trillion in the stock market, the activity in the most recent month is particularly “interesting” and reflects a distinctly positive pivot in foreign investor sentiment toward Indonesian equities.
This turnaround is significant as the market seeks to regain the ground lost over the past year.
Despite a general reduction in the percentage of foreign ownership of Indonesian equities, which decreased from 46.5 percent in September 2024 to 41.9 percent in September 2025, the daily trading value executed by these international participants has simultaneously increased.
The daily trading value surged from Rp 4.94 trillion to a higher Rp 5.93 trillion within the same period.
This paradox of lower ownership percentage coupled with higher trading value suggests that existing foreign investors are actively concentrating their capital and trading more frequently, confirming that Indonesia is still viewed as a preferred destination for selective global investment strategies focused on the nation’s key growth sectors.
Positive Trend in Foreign Investor Engagement and Market Dynamics
The current trend is not merely characterized by a temporary surge in foreign buying, but also by a broader underlying increase in investor engagement and capital commitment.
IDX data confirms that the overall number of foreign investors participating in the Indonesian stock market, as well as the total value of their assets, is on the rise.
Currently, there are 23,417 foreign investors holding total assets valued at a staggering Rp 3,864 trillion (equivalent to approximately $231 billion) on the local exchange.
While foreign investors’ equity ownership stands at 41.9 percent, their daily trading value of Rp 5.93 trillion represents a substantial 38.3 percent of the total transactions executed on the exchange.
This high percentage confirms that these international participants wield significant influence over market liquidity and price discovery.
Director Iman Rachman explicitly stated that this pattern signals that Indonesia retains its status as one of the most favored investment destinations within the emerging market landscape, a view strongly supported by the continuous flow of foreign buying recorded recently.
The increasing activity, both in terms of the number of accounts and trading value, indicates growing confidence in the macroeconomic stability of the country.
This sustained interest is crucial for providing the necessary capital depth and sophistication required for the continued development and maturation of the Indonesian capital market, particularly in sectors poised for high expansion, such as technology and green Economy initiatives.
Anticipated Year-End Surge Driven by Global and Domestic Factors
Looking ahead, the market anticipates a further acceleration in foreign buying activity over the final two months of the year, driven by a confluence of both predictable year-end dynamics and specific macroeconomic expectations.
Director Iman Rachman specifically highlighted two key factors expected to trigger a significant increase in foreign net buying.
The first is the well-known phenomenon of “portfolio window dressing,” which is a common practice among fund managers globally as they adjust their holdings to improve the appearance of their portfolio statements before the end of the calendar year.
This often leads to increased purchasing activity in promising markets like Indonesia.
The second and more powerful factor is the projected recovery of domestic market sentiment, which is closely linked to expectations surrounding global monetary policy shifts.
Specifically, the widespread anticipation of an eventual interest rate cut by the Federal Reserve in the United States is expected to significantly increase the relative attractiveness of higher-yielding emerging market assets, directly incentivizing greater foreign buying in Jakarta.
This anticipated shift in capital allocation, where global funds move from safer, lower-yielding assets back into emerging markets, is poised to provide strong support for Indonesian equities, pushing indices higher.
The collective impact of this year-end window dressing and favorable global monetary policy outlook creates a highly optimistic scenario for sustained capital inflows, reinforcing the resilience and appeal of the Indonesian Investment landscape to international portfolios.
Financial Analyst Commentary: Capital Reallocation and Rupiah Stability
The pivot to Rp 13 trillion in net foreign buying over the last month, despite the persistent year-to-date net sales, is a crucial inflection point signaling a shift in the global Investment thesis for Indonesia.
This is less about pure growth potential and more about defensive value and rate-cut arbitrage.
The fact that daily foreign trading value increased (Rp 4.94T to Rp 5.93T) while overall ownership percentage declined suggests that the foreign capital returning is highly tactical and concentrated in blue-chip, high-liquidity stocks (likely large banks and commodity leaders).
This concentration is intended to maximize returns during a period of anticipated Rupiah (IDR) strengthening.
The expected Federal Reserve rate cut serves as the primary catalyst, narrowing the yield differential between the US and Indonesia and thus de-risking the IDR.
As the IDR stabilizes or appreciates, the returns for dollar-based foreign investors are magnified, creating a “carry trade” appeal.
The local Economy benefits from this tactical foreign buying through enhanced liquidity and stabilization of the Rupiah, which directly lowers the cost of dollar-denominated debt and imports for corporations and the government.
However, this rebound remains fragile, as it is heavily reliant on external monetary policy rather than robust internal corporate earnings revisions.
Sustained, structural foreign buying will require the new administration to successfully execute its reform agenda, particularly in streamlining bureaucracy and accelerating infrastructure projects, to transition the capital from being solely rate-sensitive to being fundamentally-driven by long-term growth.
