Rotations Back to Fundamentals as Investors Return to LQ45 Stocks
Key Takeaways
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JAKARTA, Investortrust.id – Indonesia’s stock market is witnessing a clear shift in investor sentiment as funds rotate back into fundamentally strong companies after months of speculation-driven rallies. The renewed appetite for quality names has propelled the LQ45 index to a sharp rebound over the past week, signaling a market increasingly driven by fundamentals rather than short-term catalysts.
Data from the Indonesia Stock Exchange show that the LQ45 index surged 7.22 percent during the week of Oct 20-24, far outpacing the Jakarta Composite Index’s 4.50 percent gain. The rally was led by large-cap stocks such as Bank Central Asia, Bank Rakyat Indonesia, Bank Mandiri, and Bank Negara Indonesia, alongside Telkom Indonesia, Astra International, and Unilever Indonesia.
Capital market observer Reydi Octa said the rotation reflects a more rational market behavior after a period dominated by speculative trades. “The shift toward fundamentally strong stocks is becoming more visible. After a long spell of speculative names and corporate actions driving sentiment, investors are refocusing on issuers with solid earnings, rational valuations, and high liquidity,” Reydi told Investortrust in Jakarta on Monday, Oct 27, 2025.
He noted that the move back to core sectors such as banking, telecommunications, and commodities suggests investors are positioning for stability and consistent performance. “This indicates that funds are returning to the big sectors within the index,” he added.
Reydi expects the rotation to continue toward year-end, supported by prospects of a Bank Indonesia rate cut and renewed foreign inflows. He recommended stocks such as BBRI, BMRI, BBCA, MDKA, ANTM, and TLKM ahead of the upcoming window-dressing period.
Echoing that view, Indo Premier Sekuritas equity analyst David Kurniawan said the Jakarta Composite Index could test 8,400 in the near term, with support around 8,150. He highlighted the earnings season as the key driver of sentiment this week. “This earnings season will determine the market’s next direction. Traders should monitor the upcoming corporate results and use any sharp appreciation as an opportunity,” he said.
David sees banking, infrastructure, and commodities as the main sectors likely to lead the market through year-end. Within the LQ45, he pointed to Kalbe Farma with a target price of Rp 1,325, supported by stable performance, low valuation, and improving technicals.
He also maintained a buy call on Charoen Pokphand Indonesia at Rp 5,500, driven by stronger household consumption from the government’s free-meal program, and on AKR Corporindo at Rp 1,300 amid solid quarterly earnings and rising geopolitical tension supporting fuel logistics demand.
LQ45 Rebound Signals Broader Shift
The rotation trend first became visible in mid-October, when the LQ45 index showed resilience even as the broader market corrected. During Oct 13-17, when the Jakarta Composite Index fell 4.14 percent, the LQ45 slipped only 2.68 percent. By the following week, it had rebounded sharply, rising 7.22 percent compared with a 4.50 percent climb in the broader market.
Despite the recent rally, the LQ45 index remains down 12.38 percent year-to-date, contrasting with the composite index’s 5.54 percent gain. Data from TradingView show the LQ45 has risen only 3.63 percent in the past five years, far below the Jakarta Composite Index’s 57 percent increase during the same period.
According to Datatrust, the strongest LQ45 performers this year include Barito Pacific, up 244 percent to Rp 3,190; Aneka Tambang, up 105 percent to Rp 3,150; Surya Citra Media, up 95 percent to Rp 320; Unilever Indonesia, up 45.3 percent to Rp 2,760; and Pertamina Geothermal Energy, up 34.4 percent to Rp 1,270.