Indonesian Stocks Advance as Wall Street Surge Offsets Budget Concerns

INDONESIA, 31 JULY 2026 —

Indonesian stocks rose 0.54% on Friday, driven by a Wall Street tech rally and a new 40-year mortgage policy, which outweighed concerns over budget allocations. The Jakarta Composite Index (JCI) gained 33 points to 6,219, with trading volume reaching 1.14 billion shares and a turnover of Rp 450.12 billion ($24.91 million). The advance was supported by a broad rally across global equities, following upbeat US tech earnings that eased concerns over higher interest rates.

The Indonesian stock market has been facing domestic uncertainty over future budget allocations, following a Constitutional Court ruling on the government's free nutritious meals program. The court partially granted a judicial review of Law No. 17/2025 on the 2026 State Budget, which includes the program within the constitutionally mandated education budget worth 20% of state spending. The ruling requires that spending on the program not directly related to core education activities must be separated from the education operational budget by the 2028 fiscal year. This could affect the allocation of other budget items if funding for the program remains substantial in future budgets.

The current development in the Indonesian stock market is also influenced by external factors, including the rebound on Wall Street and lower oil prices. Phintraco Sekuritas expects these factors to support sentiment on the Indonesia Stock Exchange, along with recent US economic data that has eased concerns over aggressive interest rate hikes. The ongoing second-quarter earnings season and a wave of corporate actions are also seen as positive catalysts. The government's newly implemented subsidized mortgage policy, which extends loan tenors to as long as 40 years, is expected to improve housing affordability and provide fresh momentum for the property sector.

In Malaysia, the impact of the Indonesian stock market's advance is likely to be limited, as the two countries' economies and financial markets are distinct. However, the positive sentiment on Wall Street and the easing of concerns over interest rates could have a spillover effect on the Malaysian market. The Malaysian stock market may also be influenced by the performance of regional markets, including those in Japan, South Korea, and China, which traded mostly higher on Friday. Details on the specific impact on Malaysian companies and sectors are not yet available.

In terms of sector-specific developments, the property sector in Indonesia is expected to benefit from the government's subsidized mortgage policy. The technology sector is also in focus, with investor attention shifting to earnings reports from major companies such as Amazon and Apple. The strong earnings report from Microsoft has revived optimism over artificial intelligence investment, supporting the tech sector.

The outlook for the Indonesian stock market remains uncertain, with lingering concerns over budget allocations and the potential impact on the economy. However, the positive sentiment on Wall Street and the easing of concerns over interest rates are expected to support the market in the short term. Phintraco Sekuritas and Kiwoom Sekuritas Indonesia will continue to monitor developments and provide updates on the market's performance. As of 9:26 a.m. Jakarta time, markets across Asia traded mostly higher, with Japan's Nikkei climbing 4.72%, South Korea's Kospi surging 13.55%, and China's Shanghai Composite gaining 0.82%.

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