JAKARTA — The growth prospects for Indonesian energy sector issuers are anticipated to be moderate, as investors adopt a more selective approach heading into the second half of 2025. This cautious outlook comes from the Research Team at Korea Investment & Sekuritas Indonesia (KISI).
KISI’s research indicates that the energy sector’s outlook for H2 2025 appears more subdued, despite a decline in the net profits of companies within this sector due to weakening global commodity prices. “The energy sectoral index itself remains in positive territory, supported by high dividends and robust domestic demand. While the energy sector can still be considered defensive, its potential for significant gains is limited,” stated KISI’s Research Team on Thursday (September 11, 2025).
Furthermore, KISI noted a shift in capital market investor sentiment, with funds increasingly being rotated towards other sectors such as technology and consumer staples, which are currently exhibiting stronger growth trajectories. Although KISI views the energy sector as strategically important for the long term, its short-term appeal is considerably less attractive compared to the previous year.
Looking ahead, KISI also projects that the IDX Energy sectoral index will not replicate its performance as a top performer index from 2024, as 2025 is expected to mark a phase of commodity price normalization. The primary drivers for energy issuers will pivot towards operational efficiency and business diversification, with a notable example being their expansion into the New and Renewable Energy (NRE) sector.
Conversely, KISI observes a mixed outlook for foreign capital flows into Indonesian energy stocks. The combination of softening commodity prices and prevailing macroeconomic risks is likely to temper the influx of foreign funds into these equities. However, liquid big-cap energy stocks like ADRO, PGAS, and MEDC are still expected to attract foreign investment, serving as key proxies for Indonesia’s energy landscape. Consequently, foreign inflows are anticipated to be selective rather than massive.
As of Wednesday (September 10, 2025), the IDX Sector Energy index has recorded a year-to-date increase of 14.75%. Nevertheless, this growth rate remains lower than the 28% expansion observed in the previous year.
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Summary
Korea Investment & Sekuritas Indonesia (KISI) anticipates moderate growth and selective investment in Indonesia’s energy sector for H2 2025. This subdued outlook is driven by weakening global commodity prices, despite the sector’s positive index performance supported by high dividends and robust domestic demand. While considered defensive, its short-term appeal is less attractive as capital rotates to other sectors like technology and consumer staples.
KISI expects 2025 to bring commodity price normalization, with the IDX Energy index not replicating its strong 2024 performance. Energy issuers will prioritize operational efficiency and diversification, particularly into New and Renewable Energy (NRE). Foreign capital inflows are anticipated to be selective for liquid big-cap stocks like ADRO, PGAS, and MEDC, tempered by softening commodity prices and macroeconomic risks. The sector’s year-to-date growth of 14.75% is also lower than the previous year.