JAKARTA – BRI Danareksa Sekuritas has officially revised its year-end target for the Jakarta Composite Index (JCI) to 7,200. This downward adjustment is a direct response to a series of domestic and global headwinds that have significantly dampened sentiment in Indonesia’s capital market.
In a research report titled Equity Strategy: Repricing the Risk; Potential Tactical Reliefs to Emerge, analysts at BRI Danareksa Sekuritas (BRIDS) emphasized that the JCI’s decline throughout 2026 reflects a widening risk premium for Indonesia. Crucially, the firm noted that this trend is not merely a byproduct of broad-based sell-offs across emerging markets, but rather a specific reaction to domestic risk factors.
Key Drivers Behind the Market Correction
Analysts identified four primary factors eroding investor appetite for Indonesian equities: potential fiscal risks stemming from rising oil prices due to the closure of the Strait of Hormuz, decreased predictability in government policy, a negative outlook on Indonesia’s sovereign credit rating, and the impact of the MSCI rebalancing, which led to the removal of several local stocks.
The heavy exodus of foreign capital, totaling US$3.1 billion year-to-date, underscores a strategic shift by international investors to minimize exposure to these risks. Currently, the valuation of the index reflects these short-term pressures. The spread between the JCI earnings yield and bond yields has reached 242 basis points (bps), which is 270 bps wider than the historical long-term average.
While consensus earnings per share (EPS) growth for fiscal year 2026 remains at 14%—broadly aligning with the BRIDS forecast of 13.4%—analysts noted that this wider spread acts as a necessary compensation for the heightened risk premium.
Revised Outlook and Future Targets
Looking ahead, BRIDS has lowered its JCI target for December 2026 from 9,440 to 7,200. This adjustment removes a 40% premium previously assigned to conglomerate stock inflows. The revised target is supported by projected 2026–2027 EPS growth of 13% to 14%, although growth expectations for the banking sector have been trimmed to 4%–5% due to a more cautious outlook.
Despite this, the firm maintains a bullish scenario target of 8,600 and a bearish scenario of 6,550. Analysts are closely watching upcoming events, including a potential S&P rating outlook revision in July and the June MSCI Market Accessibility review, both of which are expected to continue influencing market volatility.
Path to Market Recovery
Despite the prevailing caution, BRIDS highlights three catalysts that could spark a market rebound:
- Completion of MSCI Rebalancing: Massive outflows, such as the US$162.6 million in net sales seen in Bank Central Asia (BBCA), are nearing their end, aligning closely with the firm’s estimate of US$176 million for the entire rebalancing process.
- Rupiah Stabilization: The currency is expected to find relief entering the third quarter of 2026. The second quarter, traditionally the most difficult period for the Rupiah due to dividend repatriation and seasonal foreign exchange demand for Hajj, should see less pressure, providing Bank Indonesia more room for monetary policy maneuvering.
- Geopolitical Cooling: While oil prices remain elevated, the narrative surrounding the conflict and its impact on energy costs may be reaching a peak, which could reduce the risk premium currently being applied to oil-importing nations.
Recommended Investment Opportunities
In light of this recovery potential, BRIDS has identified several stocks that appear attractive due to their current valuations:
- PT Bank Central Asia Tbk. (BBCA): Target price of Rp10,900. Its Price-to-Book Value (PBV) is approaching -2 standard deviations, offering an entry point into a business with a solid balance sheet.
- PT Indosat Tbk. (ISAT): Target price of Rp3,000. Current valuations do not yet capture the company’s solid growth prospects, and the telecommunications sector remains shielded from the specific regulatory volatility seen in commodities.
- PT Indofood Sukses Makmur Tbk. (INDF) and PT Indofood CBP Sukses Makmur Tbk. (ICBP): Target prices of Rp9,400 and Rp10,500, respectively. Analysts believe the market is overestimating the risks to demand and cost pressures for 2026.
- PT Mitra Keluarga Karyasehat Tbk. (MIKA): Target price of Rp3,300, supported by an EV/EBITDA valuation currently at -3 standard deviations.
- PT Charoen Pokphand Indonesia Tbk. (CPIN): Target price of Rp5,900, as the sector trades at -2 standard deviations of its 10-year valuation range.
- Energy and Shipping: PT Buana Lintas Lautan Tbk. (BULL) with a target of Rp550 and PT Elnusa Tbk. (ELSA) with a target of Rp1,110.
- Mining: PT Aneka Tambang Tbk. (ANTM) and PT Timah Tbk. (TINS) are seen as significantly mispriced, even if only half of the firm’s projections for the sector materialize.
Disclaimer: This report is for informational purposes only and does not constitute a solicitation to buy or sell securities. Investment decisions are the sole responsibility of the reader. Bisnis.com is not liable for any losses or gains arising from the use of this information.
Summary
BRI Danareksa Sekuritas has lowered its 2026 year-end Jakarta Composite Index (JCI) target from 9,440 to 7,200 due to significant market pressure. This revision is driven by domestic risk factors, including fiscal concerns from rising oil prices, policy uncertainty, potential credit rating changes, and substantial foreign capital outflows. The firm notes that the widening spread between earnings yields and bond yields reflects a heightened risk premium that international investors are currently mitigating.
Despite the downward adjustment, analysts see potential for a market rebound through the completion of MSCI rebalancing, Rupiah stabilization, and a cooling of geopolitical tensions. BRI Danareksa maintains a cautious but selective outlook, highlighting specific investment opportunities in sectors such as banking, telecommunications, and consumer goods. While the firm remains watchful of upcoming regulatory and rating reviews, it identifies several stocks currently trading at attractive valuations compared to their long-term averages.
