Islamic Stock Market Capitalization Falls 19%, Pressuring Indonesia's Sharia Finance Share

Indonesia's Islamic stock market experienced a significant downturn in early 2026, with its capitalization shrinking by 19%, equivalent to Rp 1,745 trillion. This decline has put pressure on the national Islamic finance market share, even as the overall value of Islamic financial assets continues to grow.

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The decline has become one of the reasons for the shrinkage of the Islamic finance market share by about 0.5 percent compared to the previous year.

According to Eka Jati R Firmansyah, Deputy Director of the National Committee for Sharia Economy and Finance (KNEKS), this drop in stock market capitalization is a primary reason for the Islamic finance market share shrinking by approximately 0.5% compared to the previous year. Despite this challenge, the total assets within the national Islamic finance industry recorded a positive year-on-year growth of 6.4%, reaching Rp 10,662 trillion as of April 2026. However, this growth rate is slower than that of the broader national financial sector, which grew by 8.7%, preventing an increase in the Islamic finance market's overall share.

Firmansyah noted that the Islamic finance industry still faces hurdles, particularly in the capital market sector, which has historically been the largest contributor to Islamic finance assets. He stressed the need for efforts to enhance the attractiveness of Sharia-compliant instruments to reignite industry growth. "Strengthening literacy, product innovation, and policy support are still needed for the Islamic finance industry to grow faster and increase its market share within the national financial industry," he stated.

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This condition shows that the Islamic finance industry is still facing challenges, especially in the capital market sector, which has been the largest contributor to Islamic finance assets.

In contrast to the capital market's performance, the Islamic banking sector demonstrates a positive trajectory. As of April 2026, Islamic banks' assets reached Rp 1,055 trillion, an 11% increase from the same period last year. Customer deposits (DPK) rose by 12.1% to Rp 824 trillion, and financing grew by 10.7% to Rp 724 trillion. The market share for Islamic banking also saw a slight uptick, moving from 7.44% to 7.46%.

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Therefore, efforts are needed to strengthen the attractiveness of Sharia instruments so that industry growth can increase again.

Currently, the capital market constitutes the largest portion of the Islamic finance industry, accounting for about two-thirds of total assets, followed by non-bank Islamic financial institutions and Islamic banking. The substantial contribution of the capital market means that the decline in Islamic stock capitalization significantly impacts the overall performance of the Islamic finance industry. Firmansyah believes that reinforcing financial literacy, fostering product innovation, and implementing supportive policies are crucial for accelerating the growth of the Islamic finance industry and expanding its market share.

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Strengthening literacy, product innovation, and policy support are still needed for the Islamic finance industry to grow faster and increase its market share within the national financial industry.