JAKARTA — Despite recording the weakest performance in Southeast Asia and the broader Asia-Pacific region due to the MSCI index rebalancing, the Composite Stock Price Index (IHSG) shows promising signs of a potential rebound.
During the trading week of May 11–13, 2026, the IHSG faced significant downward pressure. Data from the Global Index Comparison revealed that the index closed in the red with a correction of 3.53% to reach the level of 6,723.32. This decline stands in stark contrast to the performance of other ASEAN markets; for instance, the Singapore Straits Times Index (STI) surged by 1.67%, while the Thailand SET Index grew by 1.13% during the same period.
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The intensity of the pressure on the domestic market suggests that the volatility is specific to local developments, primarily the results of the May 2026 MSCI index review, which resulted in the net removal of 18 Indonesian stocks.
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The weakness of the IHSG becomes even more apparent when viewed against the wider Asia-Pacific scale. While South Korea’s KOSPI soared by 4.61%, and both China’s SSE Composite and Japan’s Nikkei 225 remained in the green with gains of 1.50% and 0.89% respectively, the Indonesian market struggled to find its footing.
However, analysts suggest that the selling pressure triggered by the May 2026 MSCI rebalancing may have reached a saturation point. Despite the removal of 18 domestic stocks from the global index, there is a strong possibility of an IHSG recovery, driven by the potential rotation of foreign capital back into stocks with robust fundamentals.
According to research from Kiwoom Sekuritas Indonesia, market anxiety regarding foreign capital exodus is beginning to subside as estimated outflows appear to be lower than initial forecasts. While the market was previously gripped by panic over potential outflows exceeding Rp50 trillion, current projections have moderated to a range between Rp27.8 trillion and Rp34.7 trillion.
“The MSCI pressure may look daunting on the surface, but the actual impact is likely not as severe as the headlines suggest,” stated the Kiwoom research note published on Saturday, May 16, 2026.
Furthermore, the removal of certain stocks from the MSCI index is expected to increase the relative weighting of blue-chip stocks and major banking institutions. This shift creates space for foreign liquidity to rotate into issuers with stronger governance and liquidity profiles, such as PT Bank Central Asia Tbk. (BBCA), PT Bank Mandiri (Persero) Tbk. (BMRI), PT Bank Negara Indonesia (Persero) Tbk. (BBNI), and PT Telkom Indonesia (Persero) Tbk. (TLKM).
“Globally, many stocks were removed from the MSCI index this time. However, for the domestic market, this has the potential to redirect foreign interest back toward our major banking stocks,” the research highlighted.
From a technical standpoint, although the IHSG touched its lowest level of the year at 6,762, the market is signaling an opportunity to neutralize selling pressure. Should the index successfully break through the nearest resistance area in the 6,980–7,015 range, the momentum for a rebound toward the green zone is expected to strengthen significantly.
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Summary
The Composite Stock Price Index (IHSG) recently experienced a significant decline of 3.53% to 6,723.32, marking it as the weakest performer in the Asia-Pacific region during the second week of May 2026. This downturn was largely driven by the removal of 18 Indonesian stocks following the MSCI index rebalancing, which triggered considerable selling pressure. Despite these challenges, analysts note that the market’s anxiety is subsiding as actual foreign capital outflows appear more moderate than initial projections of Rp50 trillion.
Market experts anticipate a potential rebound as investors shift their focus toward blue-chip stocks with strong fundamentals and solid governance, such as major banking institutions and Telkom Indonesia. The reduction in the number of listed companies in the index is expected to increase the weight of these high-liquidity stocks, attracting renewed foreign interest. Technically, the market is currently positioned to neutralize selling pressure, with analysts suggesting that breaking the 6,980–7,015 resistance range could trigger a significant recovery.
