Foreign Funds Re-enter: Window Dressing and Stimulus Fueling the Stock Market?

Rancak Media – JAKARTA – The Indonesian stock market has recently experienced a powerful surge of foreign capital inflows over the past month. The critical question on investors’ minds now is whether this robust trend can be sustained until the close of the year.

According to data from the Indonesia Stock Exchange (IDX), while the market recorded a foreign net sell of Rp114.96 billion during trading on Thursday, November 6, 2025, this was overshadowed by a substantial foreign net buy of Rp15.45 trillion over the last month. Foreign investors particularly targeted several prominent stocks, including PT Bank Central Asia Tbk. (BBCA), which saw a foreign net buy of Rp3.43 trillion within the month.

Other favorites among foreign investors included PT Telkom Indonesia Tbk. (TLKM) with a foreign net buy of Rp1.88 trillion, and PT Astra International Tbk. (ASII), securing a Rp1.5 trillion foreign net buy over the same period. This trend culminated in foreign investors recording at least Rp12.96 trillion in net buys throughout October 2025, marking one of the year’s largest monthly net inflows. This robust capital influx has significantly alleviated the year’s foreign net sell pressure, reducing the total year-to-date (YTD) foreign net sell to Rp39.24 trillion.

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Imam Gunadi, an Equity Analyst at PT Indo Premier Sekuritas, highlights that the surge of foreign capital into emerging markets, including Indonesia, has been a key driver behind the impressive performance of the Jakarta Composite Index (IHSG). The IHSG has repeatedly achieved new all-time high (ATH) closing records, most recently reaching an ATH close of 8,337.06 during trading on Thursday, November 6, 2025.

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Imam attributes this substantial inflow of foreign funds into the Indonesian stock market to the significant improvements in domestic economic fundamentals. He noted, “Indonesia’s economic growth in both Q2 and Q3 2025 surpassed consensus expectations, even amidst a global economic slowdown. This clearly indicates that the economic momentum and public purchasing power remain remarkably solid,” Imam told Bisnis on Thursday, November 6, 2025.

The Central Statistics Agency (BPS) recently reported that economic growth for Q3 2025 reached 5.04% year-on-year (YoY) compared to the same period last year. This performance exceeded prior analyst projections; a survey of 30 economists by Bloomberg had set a median forecast of 5% YoY for Q3 2025 growth. While this figure represents an increase from the 4.95% YoY recorded in the corresponding period last year, it did show a slight deceleration compared to the 5.12% growth in the previous quarter.

Furthermore, real sector activity also paints a positive picture, with Indonesia’s Manufacturing PMI remaining in the expansive zone, above the 50-point mark, for three consecutive months. This consistent performance signals rising demand and improved production capacity. “These robust conditions are further reinforced by proactive government policy support, including the disbursement of approximately Rp200 trillion in stimulus funds through the banking sector, acting as a crucial economic booster,” Imam elaborated.

Additionally, Bank Indonesia (BI) has implemented five interest rate cuts throughout the year, fostering a more accommodative monetary environment. “Consequently, the foreign fund inflows and the strengthening of the IHSG are perfectly aligned with a solid economic foundation, rather than being merely driven by short-term sentiment,” Imam concluded.

Looking ahead, Imam suggests that as long as trade tensions between US President Donald Trump and Chinese President Xi Jinping remain conducive, the potential for continued foreign capital inflows into the domestic market persists. “Approaching the end of 2025, the market also stands to gain additional catalysts from the reallocation of the government’s 8+4+5 stimulus package, which can sustain Indonesia’s economic recovery momentum,” Imam explained further.

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Concurring with this optimistic outlook, Nafan Aji Gusta, Senior Investment Information at Mirae Asset Sekuritas, anticipates that the strong trend of foreign fund inflows observed over the past month, particularly throughout October 2025, will extend into the year-end. “This is further bolstered by expectations surrounding the ‘window dressing’ phenomenon and the ‘Santa Claus rally’,” Nafan stated. “The IHSG could well maintain its bullish trajectory. Historically, November and December tend to be bullish months, a trend that often continues into January of the following year,” Nafan told Bisnis on Thursday, November 6, 2025.

Window dressing refers to a strategy employed by fund managers to enhance the appearance of their portfolio performance before reporting it to investors. Meanwhile, the Santa Claus rally describes a commonly observed trend of rising stock prices, typically occurring in the final week of December.

Moreover, several government fiscal stimulus policies are expected to further boost economic growth. Additionally, corporate actions by issuers, such as share buybacks, are contributing to positive sentiment. The market has also shown strong appreciation for issuers’ performance in Q3 2025.

Globally, conditions remain relatively conducive. The Federal Reserve has adopted a loose monetary policy stance, and sentiment surrounding former President Trump’s tariff policies has also subsided, reducing a potential source of market volatility.

Disclaimer: This news article is not intended to encourage buying or selling stocks. Investment decisions are solely at the discretion of the reader. Bisnis.com is not responsible for any losses or gains arising from the reader’s investment decisions.