JAKARTA — The Jakarta Composite Index (JCI) opened with a cautious tone on Friday, displaying volatility as investment managers began adjusting portfolios ahead of the MSCI index rebalancing, which takes effect at the close of trade. Initially, the index dipped 17.42 points, or 0.28 percent, to 6,112.77, while the LQ45 index, tracking the 45 most liquid stocks, fell 1.69 percent to 609.89.
However, market momentum shifted shortly after the opening bell. By 10:21 WIB, the JCI managed a recovery, climbing to 6,185.17, marking a 0.9 percent gain from the previous session. According to Ratna Lim, Head of Research at Phintraco Sekuritas, the market is expected to remain fluid throughout the day. She noted that the MSCI rebalancing is a primary driver, as global managers reposition their holdings, potentially leading to heavy sell-offs in stocks removed from the index and heightened market fluctuations.
Beyond the immediate market mechanics, investor sentiment is also being influenced by domestic policy developments. The Indonesian government is currently weighing new incentive schemes for nickel-based electric vehicle (EV) batteries. Options under consideration include government-borne Value Added Tax (VAT) reductions ranging from 40 percent to 100 percent. While schemes for nickel and non-nickel batteries will be tiered, those utilizing nickel are expected to receive preferential support. Although the implementation of these incentives has been delayed by one month, the policy represents a potential long-term boost for nickel-focused battery manufacturers.
On the global stage, market sentiment has been bolstered by reports of a potential 60-day extension of the ceasefire between the United States and Iran. Although pending final approval from President Donald Trump, the market has reacted positively to signs of de-escalation in Middle Eastern geopolitical tensions. Meanwhile, global oil prices have shown signs of stabilizing, easing concerns regarding energy supply.
The broader international landscape shows mixed performance. European markets closed lower on Thursday, with the Euro Stoxx 50, FTSE 100, DAX, and CAC 40 all recording losses. Conversely, Wall Street saw a positive finish, with the Dow Jones, S&P 500, and Nasdaq Composite closing in the green. Across the Asia-Pacific region, trading remained varied on Friday morning, with the Nikkei and Hang Seng posting gains, while the Shanghai Composite saw a slight retreat.
Looking at the broader economic outlook, Finance Minister Purbaya Yudhi Sadewa remains optimistic about the JCI’s trajectory. Earlier this week, he expressed confidence that the index would rebound following a recovery in national economic fundamentals. “Looking at the technicals, I believe the index will pick up speed,” Purbaya stated at the Presidential Palace on May 22, 2026. He urged market participants to remain resilient, emphasizing that the government is committed to strengthening the national economy.
Purbaya maintains that stock prices are fundamentally linked to corporate profitability and macroeconomic health. He highlighted that as the economy improves, corporate earnings naturally rise, which should support equity prices. “If a company is profitable, it is unlikely its stock would continue to fall. If it does, it is simply undervalued, making it a sound buying opportunity,” he concluded.
Summary
The Jakarta Composite Index (JCI) experienced a volatile start but rebounded to a 0.9 percent gain following an initial dip. This movement was primarily driven by investment managers adjusting portfolios in anticipation of the upcoming MSCI index rebalancing. Analysts expect market fluctuations to persist throughout the session due to ongoing global repositioning of holdings.
Beyond technical factors, market sentiment is influenced by potential government incentives for nickel-based electric vehicle batteries and signs of de-escalation in Middle Eastern geopolitical tensions. Finance Minister Purbaya Yudhi Sadewa remains optimistic about the JCI, citing strong national economic fundamentals and the belief that current stock prices are undervalued. Investors are encouraged to focus on long-term corporate profitability as a key driver for market recovery.