Flooring Guide by Cinvex – JAKARTA — Indonesia’s financial and property stock sectors unexpectedly registered declines in September 2025, even after the US Federal Reserve (The Fed) and Bank Indonesia (BI) announced crucial cuts to their benchmark interest rates. This counterintuitive market reaction has prompted close scrutiny from investors and analysts alike.
The Fed initiated a 25 basis point (bps) reduction in its benchmark interest rate, adjusting the range to 4.00%–4.25% on Thursday, September 17, 2025. This move followed a similar decision by Bank Indonesia, which had previously trimmed its BI Rate by 25 bps to 4.75% during its Board of Governors’ Meeting (RDG), indicating a broader trend towards monetary easing.
Despite these supportive interest rate cuts, specific market segments exhibited weakness. According to data from the Indonesia Stock Exchange (BEI), the property index saw a modest dip of 0.05%, while the financial index corrected by 0.59% during the first trading session. In stark contrast, the broader Jakarta Composite Index (IHSG) defied these sectoral headwinds, strengthening by 0.27% to reach an impressive 8,046.60. This overall market resilience was significantly bolstered by stocks from Prajogo Pangestu’s Barito group, including BRPT, CUAN, PTRO, and BREN, which emerged as primary drivers of the ascent.
While the IHSG successfully breached the 8,000 threshold, a deeper look into market activity revealed that foreign investors continued to actively divest shares from prominent banking institutions like BBCA and BMRI, among others. Capital market observer Reydi Octa had earlier suggested that the IHSG’s rally was already quite elevated in the run-up to The Fed’s announcement. He warned that despite the recent gains being partly fueled by foreign capital inflows, the inherent risk of profit-taking subsequent to such major announcements remained significant.
“Indeed, the potential for a ‘sell on news’ scenario is a very real concern for short-term traders who aim to capitalize on the inherent volatility generated by both Bank Indonesia’s and The Fed’s interest rate announcements,” Reydi recently explained to Bisnis.
Moreover, the inflow of foreign funds into the domestic stock market has not been as substantial or consistent as some might believe. While daily investor activity recorded net buys, the cumulative figures paint a different picture, showing a significant net sell of Rp61.2 trillion year-to-date as of yesterday. Reydi concluded that “this serves as a signal that foreign capital entry is neither structured nor massive; rather, it appears to be more tactical or limited, suggesting that the IHSG might not yet be the primary destination for large-scale foreign fund allocation.”
In line with these projections, Reydi identified shares in big banks, property, and consumer sectors as being the most susceptible to potential corrections if widespread profit-taking occurs, particularly as they have been driven by expectations of future interest rate reductions.
Adding to this cautious market assessment, Nafan Aji Gusta, Senior Market Chartist at Mirae Asset Sekuritas Indonesia, underscored that the market continues to closely monitor the evolving dynamics of The Fed’s policy decisions. This intense scrutiny encompasses various releases, from the Federal Open Market Committee (FOMC) Meeting Minutes to the actual interest rate decisions and the FOMC Economic Projections, each offering vital clues about the central bank’s direction.
The market had initially harbored hopes for a more aggressive monetary easing stance from The Fed, with some anticipating a substantial rate cut of up to 50 bps in September 2025. However, under the leadership of Jerome Powell, The Fed is now widely expected to adopt a more cautious approach. This prudence is largely dictated by persistent inflationary pressures, as clearly evidenced by data from the US Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE).
“Given these prevailing conditions, The Fed is likely to implement only a 25 bps cut. This could certainly trigger a ‘sell on news’ reaction across the market,” Nafan elaborated to Bisnis, summarizing the cautious sentiment.
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Summary
Despite benchmark interest rate cuts from both the US Federal Reserve (25 bps) and Bank Indonesia (25 bps) in September 2025, Indonesia’s financial and property stock sectors unexpectedly experienced declines. The property index dipped by 0.05% and the financial index corrected by 0.59%. In contrast, the broader Jakarta Composite Index (IHSG) rose by 0.27% to 8,046.60, largely supported by specific Barito group stocks.
This counterintuitive market reaction was attributed to continued foreign investor divestment from prominent banking institutions and a “sell on news” effect following the Fed’s announcement. Analysts suggested the market rally was already elevated, and a more cautious 25 bps rate cut, driven by persistent inflation, likely triggered profit-taking. Foreign capital inflows have also been tactical rather than substantial year-to-date, leaving sectors like banking and property vulnerable to corrections.