JCI Rebounds but MSCI Concerns Keep Market Risk Elevated

JAKARTA, JakartaWeekly.com — The Jakarta Composite Index (JCI)  rebounds, but MSCI concerns keep market risk elevated. JCI gained 4.9% over the past week, rising from the previous week’s closing level of 5,185.10 to 5,439.26. However, earlier in the week, on October 19, 2026, the JCI had closed in negative territory at 4,996.61.

Mirae Asset Sekuritas Senior Analyst Nafan Aji Gusta explained that the JCI’s movements over the past week were still marked by high market uncertainty. Particularly after MSCI announced a consultation on a proposal to reclassify Indonesia from an Emerging Market to a Standalone Market. 

“The announcement heightened investor concerns over the outlook for foreign capital flows, trading liquidity, and the attractiveness of Indonesia’s stock market to global investors,” Nafan told Jakarta Weekly on Saturday, October 24, 2026. 

Nevertheless, the JCI staged a technical rebound after a sharp correction in the previous week. The gains indicated that buying interest was beginning to emerge in stocks that had experienced significant declines, although this did not yet signal a full recovery in investor confidence. 

Regarding MSCI’s announcement, Nafan said the issue warranted close attention because it could have structural implications for Indonesia’s capital market. If Indonesia were ultimately reclassified as a Standalone Market, allocations from global institutional investors that use MSCI indexes as investment benchmarks could decline. This could trigger portfolio adjustments, increase foreign selling pressure, and weigh on the liquidity and valuations of large-cap stocks. 

However, no final decision has been made. MSCI has kept the consultation period open until April 30, 2027, and is scheduled to announce its final decision no later than June 30, 2027.

“Therefore, concrete steps by the government, OJK, and the Indonesia Stock Exchange (IDX) to improve share ownership transparency, strengthen information disclosure, enhance transaction monitoring, and consistently enforce regulations will be crucial to restoring investor confidence,” he said.

Looking ahead, Nafan expects volatility to remain elevated, with the risk of further corrections still present. The JCI’s gains over the past week are not yet sufficient to confirm that the market has reached a bottom. 

The rebound can still be classified as a technical recovery following significant selling pressure. Confirmation that the market has formed a bottom would require sustained buying volume, improved foreign fund flows, and the JCI’s ability to hold its support levels.

If foreign selling pressure continues and uncertainty surrounding MSCI intensifies, the JCI could face another correction. Conversely, if capital market reforms are implemented effectively and investor confidence begins to recover, further gains remain possible. Overall, Nafan takes a cautiously optimistic view of the JCI’s short-term outlook, while emphasizing that investors should remain alert to volatility risks.

Looking ahead, Nafan said several factors warrant attention, particularly developments in communications between Indonesian authorities and MSCI, the implementation of capital market governance reforms, and foreign fund flows. The stability of the rupiah, the Federal Reserve’s October interest rate decision, US Treasury yields, and domestic inflation trends will also influence investors’ risk perceptions of Indonesian assets.

Domestically, investors should monitor third-quarter 2026 financial results to assess whether corporate earnings growth and underlying fundamentals can continue to support stock valuations. Globally, geopolitical developments, movements in the US dollar, and commodity prices could also affect capital flows and the performance of various sectors on the Indonesia Stock Exchange.

“Overall, the JCI’s rebound last week was an initial positive signal, but it does not yet confirm that selling pressure has ended,” he added.

The key to market recovery lies in the authorities’ ability to rebuild investor confidence through concrete, transparent, and consistent reforms. In these conditions, investors should remain disciplined in their risk management, prioritize stocks with strong fundamentals, and avoid buying decisions based solely on the assumption that a sharp correction automatically means stocks have become cheap.