Flooring Guide by Cinvex — JAKARTA – The decline of the Composite Stock Price Index (IHSG) throughout the first four months of 2026 has opened a strategic window for investors to accumulate undervalued stocks with solid fundamentals.
KISI Sekuritas Head of Research, Muhammad Wafi, highlights several stocks with attractive valuations, specifically those with a Price-to-Book Ratio (PBV) between 1 and 1.5 times, yet maintaining strong earnings visibility. Key recommendations include AADI, AKRA, BBCA, MEDC, and AMRT. Additionally, INDF and ICBP remain viable options due to their limited exposure to foreign market sentiment.
Analyzing current market dynamics, Wafi observes a clear divide in investor behavior: local institutions are beginning to accumulate stocks gradually at support levels, while retail investors are adopting a “wait-and-see” approach.
“Accumulation is permitted, provided it is done selectively and in stages. The current correction has entered an attractive zone for long-term positions. Investors should monitor two critical dates: the MSCI announcement on May 12, 2026, and the rebalancing effective date on June 1, 2026. If the MSCI update does not worsen market sentiment, there is significant potential for a relief rally,” Wafi noted.
Mirae Asset Sekuritas Senior Market Analyst, Nafan Aji Gusta, echoes this sentiment, asserting that the current market climate offers an excellent opportunity to gain from undervalued stocks. Nafan sees a strong potential for a rebound, with a positive scenario targeting the IHSG at 8,312 by year-end 2026. Notably, the current Price-to-Earnings (PER) ratio of the IHSG sits below its two-year average.
For the second quarter, Mirae Asset Sekuritas recommends a gradual accumulation of high-fundamental stocks, including ADMR (target price Rp2,130), ADRO (Rp2,780), ANTM (Rp4,390), BBCA (Rp8,350), BBNI (Rp4,520), BBRI (Rp3,760), BMRI (Rp6,200), EMAS (Rp10,900), MEDC (Rp1,820), PGAS (Rp2,320), and UNTR (Rp33,975).
“This presents a genuine opportunity for domestic investors to accumulate cheap assets, regardless of negative outlooks from rating agencies like Moody’s and Fitch,” Nafan added.
The “Jumbo” Stock Slump
The sluggish performance of the IHSG in 2026 is largely attributed to the sharp decline in large-cap stocks. Companies like DSSA, BBCA, and BREN, which typically serve as the engine of the index, have now shifted into the list of the top 10 year-to-date (YtD) laggards.
Data from the Indonesia Stock Exchange (BEI) as of April 30 indicates that the IHSG has fallen approximately 19.55% to 6,956.81 YtD. This marks a level not seen since June 2025, a period when the market was beginning to recover following the U.S. tariff policy announcements.
Concurrent with this decline, foreign investors recorded a net sell of Rp49.87 trillion, leaving the IHSG with a PER of 14.69 times and a PBV of 1.9 times. A combination of geopolitical tensions, a lack of domestic catalysts, and new market reform regulations has contributed to the underperformance of several blue-chip stocks.
Notable laggards include PT Dian Swastatika Sentosa Tbk (DSSA), which corrected 60.02% to Rp1,615 post-stock split, pulling the IHSG down by 214.26 points. Similarly, PT Barito Renewables Energy Tbk (BREN) declined 54.02% to Rp4,460, impacting the index by 193.86 points. Both stocks were listed under the high shareholding concentration (HSC) category by the BEI on April 2, 2026, and have since experienced significant corrections.
The banking sector has faced similar headwinds. PT Bank Central Asia Tbk (BBCA) dropped 27.55% to Rp5,850, while PT Bank Rakyat Indonesia (Persero) Tbk (BBRI) and PT Bank Mandiri (Persero) Tbk (BMRI) fell 18.31% and 13.92%, respectively. Other significant declines were seen in PT MD Entertainment Tbk (FILM), PT Barito Pacific Tbk (BRPT), PT Telkom Indonesia (Persero) Tbk (TLKM), PT Bayan Resources Tbk (BYAN), and PT Ekamas Mora Republik Tbk (MORA).
Drivers of Market Pressure
The current pressure on the Indonesian stock market stems from a convergence of global and domestic sentiments. Rising oil prices due to regional conflict in Iran have pushed investors away from riskier assets. Simultaneously, the MSCI’s decision to suspend changes to the composition of Indonesian stocks triggered short-term capital outflows.
BRI Danareksa Sekuritas analyst, Abida Massi Armand, noted that the sharp correction has brought the IHSG’s PE ratio down to the 11-12 times range—near a five-year low and well below the 14-15 times historical average. “This suggests that the risks associated with MSCI, the weakening Rupiah, and FOMC uncertainty have already been largely discounted by the market,” Abida explained.
While the market awaits further catalysts—such as the stabilization of the Rupiah and clarity on Federal Reserve interest rate policies—Abida believes the current index level offers a sufficient margin of safety for medium-term investors to begin accumulating.
Structural improvements are also on the horizon. The implementation of HSC, refined free-float rules, and stricter index criteria are expected to strengthen the capital market’s foundation. Provided the Rupiah remains stable below Rp17,000 and reforms proceed as scheduled, Indonesia has the potential to return to a foreign net-buy position by the third or fourth quarter of 2026.
Disclaimer: This news article is not intended as an invitation to buy or sell specific stocks. Investment decisions remain entirely at the reader’s discretion. Bisnis.com is not responsible for any financial losses or gains resulting from the reader’s investment decisions.
Summary
The Indonesia Composite Index (IHSG) has experienced a significant decline of approximately 19.55% year-to-date, driven largely by foreign capital outflows and the underperformance of major blue-chip stocks. Analysts note that this downturn, compounded by global geopolitical tensions and uncertainty regarding interest rates, has pushed the market’s price-to-earnings ratio to historical lows. Despite these challenges, experts view the current valuation as a strategic opportunity for long-term investors to accumulate high-fundamental assets at discounted prices.
Financial analysts recommend a selective and staged approach to buying undervalued stocks, with specific interest in companies within the banking and energy sectors. Market sentiment is expected to remain volatile until the upcoming MSCI rebalancing in June, but structural reforms and potential stabilization in the Rupiah offer a pathway for recovery. Investors are encouraged to monitor market dynamics closely as the index seeks to establish a firm base for potential gains later in 2026.