Dovish Fed Signals and Window Dressing Bolster IHSG Prospects by End-2025
JAKARTA – Global investment bank JP Morgan projects a robust performance for the Indonesian stock market, with the Jakarta Composite Index (IHSG) potentially surging to an ambitious 10,000 by 2026 under an optimistic outlook. This bullish forecast underscores strong prospects for key blue-chip stocks such as ASII, ICBP, and ANTM, which are expected to lead the charge in the coming years.
Analysts at JP Morgan Securities highlighted a significantly brighter outlook for the Indonesian capital market following the nation’s political transition period in 2025. The firm forecasts increased fiscal spending, drawing from both the state budget and Danantara, which is expected to propel economic growth and bolster domestic consumption. This positive momentum is further underpinned by improving global macroeconomic conditions and a notable easing of geopolitical tensions worldwide.
Furthermore, JP Morgan anticipates a continuation of the monetary easing trend, with Bank Indonesia (BI) expected to implement an additional 50 basis point interest rate cut next year. This move, facilitated by enhanced system liquidity, is projected to keep the current account deficit (CAD) at a highly manageable level, specifically below 1% of the country’s Gross Domestic Product (GDP).
The JP Morgan Research Team, in a note dated Tuesday, December 2, 2025, outlined their diverse scenarios for the IHSG. Their base case target for the index by the end of 2026 is set at 9,100. For an exceptionally favorable market environment, their bull case scenario projects the IHSG reaching 10,000, while a more cautious bear case scenario forecasts the index at 7,800.
However, JP Morgan also cautioned against potential headwinds, identifying rupiah volatility as the primary risk factor. Persistent depreciation of the local currency could undermine both business and consumer confidence, potentially triggering capital outflows and tempering market optimism.
Looking ahead, JP Morgan has identified several key sectors positioned for robust growth. The firm’s primary overweight sectors for the coming year include Industrials, Materials, Consumer Staples, Consumer Discretionary, and Property, reflecting their confidence in these segments’ earning potentials.
Within these favored sectors, JP Morgan has curated a list of top stock picks for 2026. Their selections for large-cap stocks include banking giant BBCA, automotive powerhouse ASII, consumer staple leader ICBP, mining conglomerate ANTM, and tech innovator GOTO. For the small and medium-cap (SMC) segment, the firm favors telecommunications provider ISAT, media and technology company EMTK, infrastructure developer JSMR, retail operator MAPI, and property developer PWON.
Notably, out of these twelve recommended stocks, eleven have garnered an ‘overweight’ rating from JP Morgan, signaling a strong conviction. Only BBCA received a ‘neutral’ rating, indicating a more cautious, yet still positive, outlook.
JP Morgan has also assigned specific price targets for these prominent stocks. BBCA is targeted at Rp8,000 per share, while ASII is set at Rp6,250. ICBP carries a target of Rp12,900, GOTO at Rp95, and ANTM is projected to reach Rp3,700 per share.
For the small and medium-cap selections, ISAT is given a target price of Rp2,900 per share. EMTK’s price target is estimated at Rp1,600, JSMR at Rp5,175, MAPI at Rp1,690, and PWON is anticipated to reach Rp560 per share.
Disclaimer: This article is not an invitation to buy or sell any stocks mentioned. All investment decisions rest solely with the reader. Bisnis.com bears no responsibility for any losses or gains that may arise from readers’ investment choices.
Summary
JPMorgan projects a strong performance for the Indonesian stock market, forecasting the Jakarta Composite Index (IHSG) to potentially reach 10,000 by 2026 under an optimistic scenario, with a base case target of 9,100. This bullish outlook is underpinned by increased fiscal spending, improving global macroeconomic conditions, easing geopolitical tensions, and an anticipated 50 basis point interest rate cut from Bank Indonesia. These factors are expected to drive economic growth and domestic consumption.
The primary risk identified is rupiah volatility, which could undermine confidence and lead to capital outflows. JPMorgan’s top overweight sectors for the coming year include Industrials, Materials, Consumer Staples, Consumer Discretionary, and Property. Their top large-cap stock picks for 2026 are BBCA, ASII, ICBP, ANTM, and GOTO, with small-to-medium-cap favorites including ISAT, EMTK, JSMR, MAPI, and PWON, most of which carry an ‘overweight’ rating.