Indonesian Banking Stocks: Oversold Conditions Present Buying Opportunity

Foreign Investor Sentiment Shifts

Indonesian banking stocks, particularly major players like PT Bank Central Asia Tbk. (BBCA) and PT Bank Mandiri (Persero) Tbk. (BMRI), have faced significant selling pressure from foreign investors throughout 2025. The selling spree has resulted in substantial year-to-date net sell figures: Rp26.94 trillion for BBCA, Rp17.38 trillion for BMRI, Rp4.71 trillion for BBNI, and Rp3.64 trillion for BBRI.

Factors Driving Foreign Investor Decisions

Equity Research Analyst Farell Nathanael from OCBC Sekuritas identified several factors contributing to foreign investors' negative sentiment towards Indonesian banking stocks. Key concerns include deteriorating asset quality, manifested in rising non-performing loans (NPL), and slower lending growth due to liquidity constraints. These factors have collectively contributed to the significant sell-off observed in the market.

Market Reaction and Stock Performance

The substantial foreign investor selling has had a noticeable impact on stock prices. Major banking stocks have recorded significant year-to-date declines: BBCA has dropped 12.4%, BMRI has fallen 17.02%, and BBRI has decreased 3.68%. Despite these declines, analysts are beginning to see current price levels as attractive buying opportunities.

Positive Outlook for 2026

Analysts are optimistic about a potential reversal in foreign investor sentiment heading into 2026. Several factors are expected to drive this shift: first, Bank Indonesia's continued rate cuts, which should stimulate credit growth and improve banking sector fundamentals; second, government stimulus measures that are likely to inject liquidity into the financial system. The combination of these factors is expected to make Indonesian banking stocks more attractive to foreign investors.

Government and Central Bank Support

The government's recent liquidity injection of Rp200 trillion, sourced from Bank Indonesia, is seen as a positive catalyst for the banking sector's fundamental performance. This liquidity infusion, combined with the central bank's accommodative monetary policy stance, creates a favorable environment for banking stocks. As interest rates decline, foreign liquidity is expected to flow into higher-yielding assets, including Indonesian banking stocks.

Investment Implications

The current market conditions present what analysts consider an opportune time to accumulate positions in quality banking stocks. The combination of improved fundamentals, government support, and attractive valuations creates a compelling investment case for major Indonesian banks.