Foreign Investors Cautious on Indonesia Despite Attractive Valuations

Foreign investors are holding back from aggressively re-entering the Indonesian stock market, even with current valuations appearing attractive, according to Caroline Rusli, Senior Portfolio Manager Equity at PT Manulife Aset Manajemen Indonesia (MAMI).

Rusli explained that low stock prices alone are insufficient to draw foreign capital. Investor confidence in the government's policy direction and the visibility of short-term economic catalysts are crucial factors that remain unconvincing. Indonesia is currently in a phase of "selective value," making defensive strategies and bottom-up stock selection essential.

The global market landscape shows increasing divergence across regions, currencies, and asset classes, with some proving more resilient to global shocks. As global liquidity tightens, markets with robust structural growth potential and stronger corporate earnings are poised to outperform. Rusli highlighted North Asia as a prime example, benefiting from its direct links to artificial intelligence (AI), the semiconductor industry, and rising global technology capital expenditure.

Investments by major tech companies like Amazon, Google, Meta, and Microsoft are also driving upward revisions in capital spending. This trend is expected to positively impact supply chains in Asia, especially in the semiconductor and electronics sectors, as well as advanced materials and energy infrastructure. Consequently, Asia's market strength is supported not only by relatively low valuations but also by strong structural growth catalysts for earnings, as reflected in the region's stock market performance throughout 2026 amidst global volatility.