Indonesian Stock Market Shows Growth Potential Despite Short-term Challenges

Undervaluation Presents Investment Opportunity

The Indonesian stock market is currently considered undervalued compared to its US counterparts, according to Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas Indonesia. This valuation gap presents a significant investment opportunity as the market is near its lowest level since the early 2000s global financial crisis. The current undervaluation suggests substantial potential for growth in the Indonesian Stock Exchange (IDX).

Economic Growth Projections and Government Initiatives

While Indonesia's economic growth for 2026 is projected to be below 5%, long-term prospects remain positive. President Prabowo Subianto's vision of Indonesia becoming the fourth-largest economy by 2075 provides a strong foundation for investor confidence. Recent government initiatives, particularly since Finance Minister Purbaya Yudhi Sadewa took office in September 2025, have injected Rp276 trillion into state-owned banks to boost credit distribution. Additionally, Bank Indonesia has implemented liquidity easing measures worth Rp400 trillion, further supporting market liquidity.

Market Outlook for 2026

The combination of current undervaluation and supportive government policies creates a favorable environment for the Indonesian stock market. The IHSG (Indonesian Composite Index) is seen to have the potential to reach 10,000 points in 2026. This optimistic outlook is supported by both the current low valuation and proactive government measures to stimulate economic growth.