Kuya Food Express – , JAKARTA – The Jakarta Composite Index (IHSG) is projected to remain volatile with a tendency to weaken this trading week, following an 8.35% correction between May 18 and May 22, 2026. This outlook indicates continued caution in the Indonesian stock market.
Brigita Kinari, an Equity Analyst at Indo Premier Sekuritas, explained that the IHSG’s decline last week was triggered by a confluence of global and domestic sentiments, which together fueled a heightened risk-off attitude among investors. This combination of factors created an environment of uncertainty that weighed heavily on market performance.
On the external front, the market was overshadowed by the US Federal Reserve’s anticipated stance of maintaining higher interest rates. This expectation led to a strengthening of the US dollar, subsequently putting renewed pressure on the rupiah’s exchange rate. Domestically, Bank Indonesia’s decision to hike its own interest rates, while aimed at stabilization, paradoxically sparked concerns about a potential slowdown in economic liquidity, further dampening investor confidence.
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“Investor anxieties were further exacerbated by plans to implement a ‘one-door export policy’ for strategic commodities, such as coal. However, rumors of a postponement of this policy until January 1, 2027, successfully triggered a significant market rebound at the end of the week. This recovery was primarily driven by a surge in the basic materials sector (up 6.85%) and the energy sector (up 4.84%),” Kinari stated in an official announcement on Monday, May 25, 2026.
Looking ahead to the short trading week from May 25 to May 29, 2026, the IHSG is predicted to experience a limited technical rebound. Trading activities during this period are expected to be particularly sensitive and characterized by sharp fluctuations, given that the market will only operate for three trading days.
Related: MSCI and Regulatory Uncertainty Create an Opportunity to Rebalance Stock Portfolios
Despite the inherent volatility, Brigita noted that domestic sentiment received a boost from a relatively constructive FTSE Russell review. This positive assessment helped alleviate market fears of significant capital outflows. Furthermore, Bank Indonesia’s policy of raising its benchmark interest rate has begun to show positive effects on stabilizing the rupiah exchange rate, although its strengthening remains constrained by the persistent performance of the Greenback.
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“Domestic investor attention remains squarely focused on the certainty surrounding the implementation of the ‘one-door export policy’ for strategic commodities via Danantara, which is still slated to be effective from June 1, 2026. This impending certainty is expected to sustain volatility in energy and raw material stocks as investors continue to assess its impact on the national export distribution structure,” she added. Technically, the IHSG is currently trading significantly below its SMA-50, positioned around 7,166, signaling a dominant medium-term weakening trend.
Brigita further elaborated that even though the IHSG managed a 1.10% gain on Friday, May 22, the potential for index recovery is still overshadowed by high volatility. This elevated uncertainty is anticipated in the lead-up to the effective date of the MSCI rebalancing on May 29, 2026.
In the short term, the IHSG is predicted to move sideways with significant volatility. It is expected to trade within a support range of 5,996—5,899 and a resistance range of 6,318—6,459. “The 5,899 area is a critical level to maintain the possibility of a short-term rebound, while movement above 6,318 could potentially open the door for further strengthening,” she commented.
Nevertheless, selling pressure is expected to subside once the rebalancing period concludes. This could pave the way for the IHSG to gradually stabilize, particularly if the rupiah exchange rate remains robust and global sentiment improves. Such an improvement could be spurred by developments in US-Iran negotiations, which have the potential to reduce pressure on energy prices and US Treasury yields.
Here are IPOT’s stock recommendations for this week:
- Buy PT Merdeka Copper Gold Tbk. (MDKA) with a target price of IDR 3,000 and a stop loss in the IDR 2,610 area.
- Buy PT Bank SMBC Indonesia Tbk. (BTPN) with a target price of IDR 2,530 and a stop loss in the IDR 2,310 area.
- Buy PT Ultra Jaya Milk Industry & Trading Company Tbk. (ULTJ) with a target price of IDR 1,725 and a stop loss in the IDR 1,590 area.
Disclaimer: This news article is not intended to encourage the buying or selling of 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.
Summary
The Jakarta Composite Index (IHSG) is projected to remain volatile with a tendency to weaken, following an 8.35% correction. This decline was triggered by global sentiments like the US Federal Reserve’s anticipated higher interest rates, strengthening the US dollar, and domestic concerns over Bank Indonesia’s rate hike impacting economic liquidity. Investor anxieties were further exacerbated by the proposed “one-door export policy” for strategic commodities.
Despite a market rebound at week-end driven by rumors of the export policy’s postponement, the IHSG is expected to experience a limited technical rebound with high volatility ahead of the MSCI rebalancing on May 29, 2026. Domestic investor attention remains focused on the certainty surrounding the Danantara export policy, slated for June 1, 2026, which is expected to sustain volatility in energy and raw material stocks.