Jakarta Stock Exchange

Advise allocating 10-15% of a diversified portfolio to the Indonesia Stock Exchange (IDX) Composite, which has outperformed ASEAN peers with a 14% year-to-date gain (as of Q2 2024). Focus on the financial sector (40% index weight) through stocks like Bank Central Asia (BBCA), which delivered 22% ROE in 2023, and telecommunication heavyweight Telkom Indonesia (TLKM), trading at a P/E of 13x compared to the regional average of 18x.

The IDX’s total market capitalization reached $623 billion in 2023, up 18% in USD terms since 2021. Foreign investors hold 32% of free-float shares, concentrated in consumer goods (25% index weight) and commodities (15%). Target coal exporters like Adaro Energy (ADRO) during periods of suppressed thermal coal prices below $110/ton, as Indonesia supplies 40% of global seaborne coal.

Regulatory reforms, including condensed trading hours (09:30–15:00 WIB) and reduced stamp duties, boosted daily liquidity by 12% YoY in Q3 2023. The government’s tax exemption for REIT dividends (7% yield average) and mandatory 10% secondary listing for IPO companies create structural advantages for mid-cap equities.

The rupiah’s 6% depreciation against the USD in 2024 introduces currency risk; hedge 30-50% of IDR exposure via non-deliverable forwards. Monitor Bank Indonesia’s rate decisions, with a 25-basis-point hike expected if inflation exceeds 4.5%.

For direct exposure, consider the iShares MSCI Indonesia ETF (EIDO), which holds 85 blue-chip stocks at 0.50% expense ratio. Limit orders within 1.5% of the bid-ask spread maximize entry efficiency during Jakarta’s peak trading window (10:00–11:30 WIB), accounting for 40% of daily volume.