Mirae Asset Sekuritas Says Investors Remain Selective Despite Stronger-Than-Expected Economic Growth

PT Mirae Asset Sekuritas Indonesia views Indonesia’s annual economic growth of 5.3% year on year (YoY) in the second quarter of 2026 as a positive signal for the economy. However, despite this achievement, investors remain selective as the market has yet to view the growth as fully sustainable.

Rully Arya Wisnubroto, Head of Research and Chief Economist at PT Mirae Asset Sekuritas Indonesia, said this was reflected in the domestic stock market’s performance. Although the Jakarta Composite Index (JCI) continued to strengthen, the rally has yet to receive broad support from large-cap stocks with strong fundamentals or foreign capital inflows.

“The JCI continued to gain, but the quality of the rally remains limited. The index’s advance has been driven largely by speculative stocks, while foreign investors continue to record net selling in several large-cap stocks, including TLKM, BBRI, and ASII,” Rully said.

According to Rully, these conditions indicate that market participants have yet to fully embrace the economic growth data as a key investment catalyst. This is evident in the continued pressure on several fundamentally strong stocks, including TLKM, BBRI, BBCA, ASII, and BMRI, despite Indonesia’s GDP growth exceeding market expectations.

“We believe the market is currently assessing not only the headline growth figure, but also the quality and sustainability of its underlying drivers. Until foreign capital inflows return and large-cap stocks show a broader and more consistent recovery, investors are likely to remain selective,” Rully said.

Rully also noted that the rupiah’s appreciation over the past several days had been driven more by external factors than domestic conditions. According to him, the strengthening of the Japanese yen following coordinated intervention by Japan and the United States weighed on the US dollar, providing support to emerging-market currencies, including the rupiah.

“We believe the JCI rally should continue to be approached selectively until large-cap stocks and foreign capital flows demonstrate more consistent improvement,” Rully said.

In line with this view, Novani Karina Saputri, Research Analyst at PT Mirae Asset Sekuritas Indonesia, said Indonesia’s economy delivered solid performance in the second quarter of 2026, expanding by 5.3% YoY. However, the quality of growth still warrants close attention, as the expansion was partly driven by fiscal stimulus, a low base for government spending, and seasonal factors.

According to Novani, government consumption recorded the highest growth among expenditure components, rising by 16.0% YoY, driven by the payment of 13th-month salaries, personnel expenditure, and the implementation of various government programs. Meanwhile, household consumption—the largest component of GDP—slowed to 5.1% YoY, while net exports deducted 0.8 percentage points from growth as imports increased at a faster pace.

“Economic growth remained strong in the second quarter, but its underlying drivers do not yet fully reflect a sustainable strengthening of domestic demand. Several supporting factors came from temporary government spending, meaning there will likely be less room for further support in the second half of the year,” Novani said.

Novani expects the normalization of government spending following substantial disbursements in the first half, combined with the continued weak contribution from exports, to weigh on growth momentum in the third quarter of 2026. Under these conditions, Mirae Asset expects Indonesia’s economic growth to potentially slow below 5.0% YoY in the third quarter of 2026 unless it is supported by stronger investment and a more significant improvement in manufacturing activity.