Indonesia’s IHSG Falls Again: Why Are Foreign Investors Selling?

Indonesia’s Composite Index, or IHSG, ended trading on October 26, 2026 at 5,373.09, down 66.16 points, or 1.22%. The decline ended four consecutive sessions of gains and showed renewed pressure across Indonesian equities. Source: market-close report.

Foreign investors recorded approximately Rp1.85 trillion in net selling across the overall stock market during the same session. The figure means foreign sales exceeded foreign purchases within the transaction scope measured. It does not reveal the motive behind every investor’s trade.

The index and foreign flows measure different things. IHSG can fall when heavily weighted stocks weaken, while net selling is the difference between transaction values. The two can occur together without proving that foreign investors caused the entire index decline.

A fuller assessment requires the breadth of falling stocks, transaction concentration, rupiah conditions, and investor confidence following MSCI’s proposed change to Indonesia’s index classification.

IHSG close and foreign net selling on October 26, 2026. Source: Banyu Capital, based on the trading data cited in its report. The net-selling figure covers the overall stock market and differs from a regular-market-only calculation.

What Happened During the October 26 Session?

IHSG opened at 5,442.30, reached 5,453.65, then fell to 5,349.75 before closing at 5,373.09. The close was 23.34 points above the daily low.

That gap shows a partial recovery after the index reached its session low. A close below the opening level does not, however, establish that selling pressure has ended.

The same report says all 11 sectors finished lower. The decline extended beyond a single business group, although the size of the moves differed. Infrastructure fell 2.47%, energy 2.36%, and financials 0.56%.

Breadth helps distinguish a widespread decline from a move driven by only one or two stocks. Investors still need to examine the securities contributing most to index changes because constituents do not carry equal weights.

Why Is There More Than One Net-Selling Figure?

Foreign net-selling figures for the same date can differ when transaction coverage and data providers differ.

The market-close report recorded approximately Rp1.855 trillion in net selling across the overall stock market. Data cited by Ajaib show approximately Rp2.03 trillion in net selling in the regular market.

The difference does not automatically mean one number is wrong. The regular market is only one part of the total. Negotiated and cash-market transactions can have a different net direction, so the overall aggregate need not match the regular-market figure.

A simplified example illustrates the point:

• Foreign net selling in one transaction group: Rp2 trillion.

• Foreign net buying in another group: Rp200 billion.

• Combined result: Rp1.8 trillion in net selling.

These illustrative amounts are not the official October 26 calculation. They show why figures from two scopes should not be added without checking whether one is already included in the aggregate.

Net selling also does not necessarily equal money immediately leaving Indonesia. After selling shares, an investor may hold cash, buy another instrument, or conduct a later transaction. Equity-trading data alone do not show every cross-border movement of funds.

Four Factors That Can Influence Foreign Investors

One session’s data do not reveal the reason for each trade. The following factors can affect investor decisions, but their individual contributions to October 26 selling cannot be calculated from net-selling figures alone.

A. Rupiah Exchange-Rate Risk

Investors measuring returns in US dollars must account for both stock prices and the rupiah. Shares can deliver positive returns in rupiah while currency depreciation reduces the result after conversion.

Bank Indonesia’s JISDOR reference stood at Rp18,116 per US dollar on October 26, compared with Rp18,069 on October 23. More rupiah per dollar indicates rupiah depreciation on that measure over the stated period. Source: BI JISDOR data.

JISDOR reference rates on October 23 and October 26, 2026, in rupiah per US dollar. Source: Bank Indonesia. 

A JISDOR move on the same day does not prove that currency changes caused equity selling. Both can respond to a common factor or move because of separate transactions.

B. Confidence in Market Governance

Investors can consider ownership transparency, information quality, and trading integrity when pricing market risk. Unresolved concerns may influence the valuations they are willing to accept.

On October 15, 2026, MSCI opened a consultation on a proposal to reclassify Indonesia from emerging market to standalone market. Feedback is open until April 30, 2027, with a decision due by June 30, 2027. Source: MSCI announcement.

That remains a proposal under consultation, not a final decision. Index-tracking funds and active investors may also act differently according to their mandates.

C. Global Yields and Funding Costs

Investors compare opportunities in Indonesia with alternatives, including global bonds and equities. Changes in yields, interest rates, or funding costs can alter the relative appeal of risk assets.

The relationship is not always one-directional. Rising yields can reflect changing interest-rate expectations, while portfolio decisions also depend on company earnings and valuations already embedded in prices.

D. Portfolio and Liquidity Needs

Some selling can reflect client withdrawals, portfolio reweighting, risk management, or liquidity requirements. Large investors may sell their most easily traded holdings to meet those needs.

The reason for an individual trade cannot be inferred solely from whether the participant is foreign. Aggregate data combine many investors with different objectives and time horizons.

How Does Rupiah Weakness Change Returns?

Assume an investor buys Rp100 million of shares when the exchange rate is Rp17,000 per US dollar. The investment is worth approximately:

Rp100 million ÷ Rp17,000 = US$5,882

The shares then rise 5%, increasing their value to Rp105 million. If the exchange rate at sale becomes Rp18,000 per US dollar, the investment is worth:

Rp105 million ÷ Rp18,000 = US$5,833

The investment rises in rupiah but falls approximately 0.8% in US dollars in this example. The calculation excludes dividends, transaction fees, taxes, and hedging costs.

These are hypothetical figures, not an actual IHSG return. The example shows why investors using different base currencies can assess the same stock performance differently.

Aggregate Net Selling Does Not Determine Every Stock’s Direction

Overall foreign net selling can coexist with net buying in individual stocks. October 26 trading reports, for example, identified foreign net buying in BRIS even though the aggregate foreign position across the overall market was net selling. Source: foreign-transaction breakdown.

That does not automatically make a stock bought by foreign investors safer. Investors still need to examine valuation, business performance, liquidity, and whether positions change in subsequent sessions.

IHSG is a composite index with different constituent weights. One stock can rise while the index falls, and vice versa. A portfolio’s return depends on its holdings and the weight assigned to each one.

What Should Investors Watch After the Decline?

Several indicators can help assess whether pressure is widening or beginning to ease:

• Foreign net buying or selling using a consistent market scope.

• The number of rising and falling stocks, together with heavily weighted index contributors.

• Transaction values and order-book depth.

• Rupiah movements measured using consistent sources and observation times.

• Issuer disclosures and progress in the MSCI consultation.

• Company financial results, particularly cash flow and earnings quality.

The 1.22% IHSG decline after four sessions of gains shows that the recovery still faces pressure. Any sustained rebound should be assessed through broader stock participation and trading stability, rather than a single day’s gains or foreign selling alone.

Disclaimer

This article provides general information and analysis, not a recommendation to buy or sell securities. The return example uses hypothetical figures. Equity prices, exchange rates, liquidity, and index policies can change.