Flooring Guide by Cinvex – JAKARTA – Indonesia’s capital market holds a substantial potential to attract a capital inflow of US$50 billion, equivalent to Rp836.45 trillion (based on the Jisdor exchange rate of Rp16,729 per US dollar), from global foreign investors, provided it achieves a high level of liquidity.
Chapman Taylor, a Global Investment Strategist, has indicated that a significant sum of US$50 billion in foreign funds is actively awaiting entry into Indonesia. He emphasized the strong interest among global investors in allocating their capital to the Indonesian market.
However, Taylor also pointed out a critical impediment: the relatively low liquidity of the Indonesian capital market. This factor, he suggests, makes foreign investors hesitant to commit to the Indonesian stock market, largely due to concerns that insufficient liquidity would hinder their ability to exit investments smoothly.
Supporting this assessment, data from the Indonesia Stock Exchange (IDX) reveals that the average daily transaction value (RNTH) up to November 5, 2025, stood at Rp16.63 trillion, or approximately US$1.01 billion.
This figure starkly contrasts with other regional exchanges; the Indian bourse, for instance, records an estimated daily transaction value of US$12 billion to US$15 billion, while the Hong Kong exchange sees between US$30 billion and US$50 billion traded daily. The disparity highlights Indonesia’s challenge in attracting larger foreign capital flows.
Taylor further elaborated during a media discussion on Wednesday, November 5, 2025, stating, “If foreign investor funds were to flow in, market liquidity would undoubtedly increase, consequently stimulating greater activity from retail investors.” This suggests a positive feedback loop where enhanced foreign participation could invigorate the entire market.
On the other hand, Taylor also highlighted the appealing valuation of the Indonesian stock market when compared to other bourses in the region. IDX data confirms this, showing that Indonesia’s stock market currently boasts a price-to-earnings ratio (PER) of 15.23 times and a price-to-book value (PBV) ratio of 2.38 times.
Despite this attractive valuation and global investors’ recognition of the robust fundamentals of several Indonesian companies listed on the IDX, Taylor noted that the inflow of foreign capital into Indonesia remains sluggish. This paradox underscores the ongoing challenge of liquidity overshadowing otherwise favorable market conditions.
Summary
Indonesia’s capital market holds the potential to attract a significant capital inflow of US$50 billion from global foreign investors. Global Investment Strategist Chapman Taylor indicates substantial foreign funds are ready, but low market liquidity is a critical impediment. This issue makes foreign investors hesitant, concerned about their ability to smoothly exit investments.
The average daily transaction value on the Indonesia Stock Exchange is notably lower compared to other regional bourses. Despite this, the Indonesian stock market offers an appealing valuation with attractive Price-to-Earnings and Price-to-Book ratios. However, foreign capital inflow remains sluggish, as liquidity concerns currently outweigh the market’s otherwise strong fundamentals and attractive valuations.