Global investors are tiptoeing back into Indonesian markets after the turmoil witnessed earlier this year, drawn by a striking rebound in local assets as policymakers stepped in to restore stability.
Foreign funds are buying the nation’s bonds for a fourth straight month, the rupiah has appreciated more than 3.5% from June’s record low, and stocks look poised for their first quarterly inflow of 2026. Money managers including those at Invesco Ltd. and PPM America Inc. have trimmed their underweight positions in Indonesian assets.
Helping draw investors back is a series of moves aimed at restoring market confidence. President Prabowo Subianto has pledged to rein in the budget deficit, regulators have rolled out more measures to address MSCI Inc.’s concerns over market transparency, and newly appointed Bank Indonesia Governor Destry Damayanti has signaled she will stay the course.
Still, deeper doubts over policy execution mean few are rushing back in, with Prabowo’s interventionist agenda continuing to be a source of unease. A tougher global backdrop is raising the risks too, as renewed US-Iran hostilities drive up oil prices and bets grow on Federal Reserve interest-rate hikes.
“We would need to see continued policy delivery and a somewhat more supportive external environment before rebuilding a more meaningful position,” said Yiping Liao, a Singapore-based fund manager at Templeton Global, who oversees $4.35 billion in assets. “I’m still fairly cautious. The key thing for us is execution.”