Flooring Guide by Cinvex — Although the Jakarta Composite Index (JCI) recently recorded its weakest performance across Southeast Asia and the broader Asia-Pacific region due to MSCI index rebalancing, analysts suggest that a market rebound may be on the horizon.
During the trading week of May 11—13, 2026, the JCI struggled significantly, ending in the red with a 3.53% correction to close at 6,723.32. This performance stood in sharp contrast to other regional markets; for instance, Singapore’s Straits Times Index (STI) climbed 1.67%, while the Thailand SET Index gained 1.13% during the same period.
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This local downturn was primarily triggered by the May 2026 MSCI index review, which saw 18 Indonesian stocks removed from the list. The pressure on the JCI appeared even more pronounced when compared to the wider Asia-Pacific region. While the South Korean KOSPI soared by 4.61%, and both China’s SSE Composite and Japan’s Nikkei 225 managed to maintain green territory with gains of 1.50% and 0.89% respectively, Indonesia faced a unique bout of localized selling.
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However, market experts believe the selling pressure resulting from the May 2026 MSCI rebalancing is approaching a saturation point. Despite the exit of 18 domestic stocks from the global index, there is significant potential for a recovery, driven by the anticipated rotation of foreign capital back into stocks with strong fundamentals.
Research from Kiwoom Sekuritas Indonesia indicates that market anxiety regarding a foreign capital exodus is beginning to subside. Recent projections suggest that total capital outflows will be more moderate than initially feared, currently estimated between IDR 27.8 trillion and IDR 34.7 trillion—well below earlier panic-driven scenarios that predicted outflows exceeding IDR 50 trillion.
“The MSCI pressure may look daunting on the surface, but the actual impact is likely not as severe as the headlines suggest,” noted the Kiwoom research report on Saturday (16/5/2026).
Furthermore, the removal of certain stocks from the MSCI index is expected to increase the relative weighting of blue-chip stocks and major banking institutions. This shift creates space for foreign liquidity to flow into issuers with healthier governance and liquidity profiles, such as PT Bank Central Asia Tbk. (BBCA), PT Bank Mandiri (Persero) Tbk. (BMRI), PT Bank Negara Indonesia (Persero) Tbk. (BBNI), and PT Telkom Indonesia (Persero) Tbk. (TLKM).
“While many stocks globally were removed from the MSCI index during this cycle, for the domestic market, this could potentially refocus foreign interest toward our major banking stocks,” the report added.
From a technical perspective, although the JCI touched its lowest level of the year at 6,762, there are signs that the market may stabilize. If the index can successfully break through the nearest resistance area between 6,980 and 7,015, the momentum for a rebound into the green zone is expected to strengthen considerably.
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Summary
The Jakarta Composite Index (JCI) recently experienced a 3.53% decline, marking its weakest regional performance due to the removal of 18 Indonesian stocks during the May 2026 MSCI index rebalancing. Despite this downturn, analysts believe the selling pressure is reaching a saturation point as fears of excessive foreign capital outflows have moderated, with estimates now significantly lower than initial market panic projections.
Market experts anticipate a rebound driven by a potential rotation of foreign capital toward blue-chip stocks with stronger fundamentals, such as major banking institutions and Telkom Indonesia. Technical indicators suggest that if the index successfully breaks through resistance levels between 6,980 and 7,015, the market is well-positioned to regain positive momentum.