JP Morgan Sees JCI Hitting 10,000 in 2026 as Market Sentiment Enters Rebound Phase

JAKARTA, Investortrust.id - Multinational investment bank JP Morgan projects a strong rebound for Indonesian equities as it sets a 2026 bull case target of 10,000 for the Indonesia Stock Exchange Composite Index, driven by economic recovery, fiscal stimulus and improving market sentiment. The bank says on Monday, Dec 1, 2025 Indonesia is entering a new confidence phase after the 2025 political transition and expects earnings momentum to strengthen next year.

The firm outlines three scenarios in its Indonesia Equity 2026 Outlook, placing the bull case at 10,000, a base case at 9,200 and a bear case at 7,800, built on assumptions of 8 percent earnings per share growth and a 15 times earnings multiple. JP Morgan highlights a revival of what it calls the “animal spirit” in 2026, supported by fiscal expansion and the strategic role of Danantara as a catalyst for market re-rating.

JP Morgan also sees a more benign global backdrop next year as geopolitical tensions ease and external conditions stabilize. Its report notes potential room for an additional 50 basis points of rate cuts in 2026 and anticipates continued strong participation from retail investors in the first half of the year, especially in conglomerate and new economy stocks. It expects some moderation in the second half as MSCI implements its new Free Float Adjusted Index definition in May 2026, with institutional flows likely to rise thereafter.

In its analysis, JP Morgan underscores Danantara’s importance in shaping investor confidence. It says the separation of BPI Danantara, Danantara Asset Management and Danantara Investment Management helps balance public service mandates with profitability goals, and that successful execution may serve as the strongest trigger for a valuation re-rating in 2026.

The bank forecasts an 8 percent rebound in corporate earnings next year after a contraction this year, supported by stronger domestic demand and a low comparison base. It expects sectors such as industrials, materials, consumer staples, consumer discretionary and property to drive the index higher.

Strong Momentum

Indonesia’s economy continues to maintain strong momentum according to Febrio Kacaribu, Director General of Economic and Fiscal Strategy at the Ministry of Finance, who cites an expanding manufacturing sector, persistent trade surpluses and controlled inflation as key supports. He says domestic demand remains a major driver of production, employment and purchasing activity toward year-end.

“We continue to strengthen economic growth through targeted policies, including the fourth quarter 2025 stimulus, while also encouraging higher value-added exports and maintaining resilience in labor-intensive sectors so they can optimize their contribution to the national economy,” Febrio says in an official statement on Tuesday, Dec 2, 2025 in Jakarta. He adds that Indonesia’s Manufacturing PMI improved for four consecutive months and reached 53.3 in November 2025.

Febrio notes that strong domestic demand has helped lift production, hiring and purchasing, while major trading partners have also shown expansion. He points to India at 57.4, the United States at 51.9 and several Southeast Asian countries that saw rising industrial activity, including Thailand at 56.8, Vietnam at 53.8 and Malaysia at 50.1.

Indonesia’s trade performance remained robust through October 2025 with a cumulative surplus of $35.9 billion, up 44.1 percent from the same period last year. Cumulative exports reached $234.0 billion, a 7.0 percent rise supported by an 8.4 percent increase in non-oil and gas exports, while cumulative imports reached $198.16 billion, up 2.19 percent.

Inflation eased to 2.72 percent year-on-year in November from 2.86 percent in October as volatile food prices softened, dropping to 5.48 percent year-on-year from 6.59 percent. Febrio attributes the improvement to sustained food price stabilization measures that helped bring down costs of rice, red chili and chicken meat.

The government aims to maintain economic momentum by strengthening export competitiveness and ensuring adequate domestic supply, particularly food availability, to keep prices stable. It will also continue advancing international trade agreements, resource downstreaming and diversification of major trading partners to support long-term resilience.

Febrio adds that the government is preparing for year-end demand during the Christmas and New Year holidays by securing food supply and reinforcing stocks. To anticipate potential price shocks from extreme weather, he says the government is pursuing market operations, stock strengthening, food reserves and targeted price interventions.