Global investors are increasingly turning to Indonesian equities, redirecting funds from major Asian markets as anticipation grows over the Federal Reserve’s upcoming interest rate cut. So far in August, foreign investors have purchased $933.8 million worth of Indonesian stocks, marking the highest monthly inflows since April 2022, according to Bloomberg data. This surge in investment also sets Indonesian equities on track for their second consecutive month of foreign inflows.
This trend reflects a broader shift as investors reduce their exposure to larger Asian markets like China and India, favoring the comparatively undervalued markets of Southeast Asia. Alongside Indonesia, foreign investors have been net buyers of Malaysian and Philippine equities this month, with Indonesia standing out as a top choice, as its benchmark stock index continues to reach new highs.
Indonesian stocks have gained increased attention as Asian funds move away from underweight positions. Strategists at HSBC Holdings Inc., including Prerna Garg, highlighted this shift in a recent note. Additionally, Nomura Holdings Inc. strategists, led by Chetan Seth, upgraded Indonesian equities to overweight from neutral earlier this week, suggesting that they represent “possibly the best way” to invest in emerging markets as the Federal Reserve begins to reduce interest rates.
