The total market capitalization of companies listed in Indonesia has slumped more than 30% from its January peak to US$618 billion, while Singapore’s market value has risen to $645 billion, according to data compiled by Bloomberg.
Investor sentiment towards Indonesia has deteriorated in recent months amid uncertainty over a possible reclassification of its equities market to frontier status, alongside Fitch Ratings and Moody’s Ratings both revising the country’s credit outlook to negative.
Its benchmark stock index ranks among the worst performers globally, while the rupiah has repeatedly hit record lows.
“The momentum may not be in Indonesia’s favor at the moment,” said Soh Chih Kai, a portfolio manager at Lion Global Investors. However, he said a future recovery should not be ruled out.
“Nevertheless, this reinforces the relative standing of the Singapore market as capital flows continue to reward certainty amidst global policy uncertainty,” Soh said.
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A man walks to offices at the Singapore Exchange on July 27, 2016. Photo by AFP |
In a move to support the economy, Indonesia’s central bank raised its policy interest rates for the first time in two years at a policy review on Wednesday, as it works to support the rupiah currency which has fallen to a series of record lows in recent days, Reuters reported.
“The increase is a further step to strengthen the stabilization of the rupiah exchange rate amid global volatility due to the Middle East war, as well as a pre-emptive measure to keep inflation within the target range in 2026 and 2027,” Governor Perry Warjiyo said in an online press conference.
Singapore equities, meanwhile, have been supported by economic and political stability, as well as government-driven market reforms. The Straits Times Index hit a record high this week as investors sought defensive havens amid volatility triggered by the Iran war.
“Singapore’s equity market has remained relatively resilient despite ongoing global volatility, supported by its defensive sector composition and consistent inflows,” said Thilan Wickramasinghe, the head of research at Maybank Securities, as quoted by The Edge Singapore.
“This has placed the market at a relatively favourable position.”
The city-state’s equities are on track to outperform Indonesian stocks by the widest margin on record in 2026.
“Wealth is a key driver for earnings growth, and together with the strong Singapore dollar, we expect more funds to flow into the market,” said Carmen Lee, head of equity research at OCBC, as cited by Bloomberg.
