Indonesian Mid-Cap Stocks: Investors Seek Profits in the IDXSMC-LIQ Index

JAKARTA – The stocks of second-tier issuers comprising the IDX Small Medium Cap Liquid (IDXSMC-LIQ) index have exhibited a robust bullish trend throughout the current year. Despite facing a significant correction of up to 6.84% in the second month year-to-date (YtD) and an 8.24% decline over 2024, the index remarkably rebounded in the third quarter, surpassing even the performance of the highly liquid LQ45 index.

Investment Analyst at Infovesta Utama, Ekky Topan, highlights the IDXSMC-LIQ as a compelling focal point in the market this year. As of Friday, September 12, 2025, the index has surged by 8.02% since the beginning of the year, significantly outperforming the LQ45 index, which experienced a 2.65% decline. This remarkable trajectory points to a strategic shift among investors.

“The index’s ability to outperform major benchmarks like the LQ45 and IDX30 reflects an investor rotation towards second-tier stocks, which are perceived to offer higher growth potential alongside more attractive valuations,” Ekky explained to Bisnis on Monday, September 15, 2025. This rebalancing of portfolios indicates a hunt for overlooked opportunities in the Indonesian market.

Ekky further elaborates that the index’s strength is fueled by the inherent characteristics of its constituents. These are often companies undergoing significant corporate actions, benefiting from medium-term growth catalysts, or actively pursuing strategic expansions. Such proactive initiatives naturally attract investor confidence.

Moreover, as foreign funds exited blue-chip stocks during 2024–2025, mid-cap stocks have emerged as an appealing alternative for both domestic and international investors. With relatively low foreign ownership currently observed on the stock exchange, these second-tier stocks serve as a crucial buffer for the IHSG, making them more resilient to foreign selling pressure. Their movements are predominantly shaped by underlying fundamentals and corporate sentiments, rather than external capital flows.

Looking ahead, Ekky believes the prospects for IDXSMC-LIQ remain quite promising until the end of 2025, particularly if political stability and fiscal direction are maintained. Key catalysts for this positive outlook include the realization of the State Budget (APBN), expectations of interest rate cuts, and the government’s continued investment in productive sectors such as infrastructure, energy, and industrialization. Additionally, many constituent issuers are transitioning towards more integrated business models, with the financial results of these efforts anticipated to be reflected in their 2025–2026 financial reports.

For the upcoming year, Ekky sees substantial growth potential for IDXSMC-LIQ. This optimism is largely attributed to numerous expansion projects undertaken by companies within the index, which are now beginning to enter their monetization phases. This signifies a turning point where investments start generating tangible returns.

Among the notable constituents driving the IDXSMC-LIQ index’s impressive performance are shares of PT Petrosea Tbk. (PTRO), which has jumped an astounding 40.09% YtD. PT Medco Energi Internasional Tbk. (MEDC) has also seen a significant rise of 11.82% YtD, while PT Perusahaan Gas Negara Tbk. (PGAS) has increased by 12.89% since the beginning of the year. These companies are not merely seeing their share prices surge; they are actively pursuing aggressive business expansions.

For instance, MEDC is targeting an additional EBITDA of US$145 million by 2026 after increasing its ownership in the Corridor Block, signaling ambitious growth in its energy portfolio. PGAS, on the other hand, is developing the LNG Hub Arun project, slated for operation this year, to capitalize on the anticipated abundance in the LNG market by 2026. Similarly, PTRO, an issuer affiliated with Prajogo Pangestu, is diversifying its business beyond coal into the oil and gas sector following its acquisition of the Hafar Group.

“Provided that project execution remains consistent and is not hampered by external factors such as commodity price volatility or global uncertainties, fundamentally strong second-tier stocks have a significant opportunity to emerge as new market leaders, especially amidst a market that is increasingly becoming saturated with large-cap stocks,” Ekky concluded, underscoring the shift in investor focus.

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