Jakarta Composite Index Rises 20% Toward Bull Market

The Jakarta Composite Index advanced toward bull-market territory on Monday, recording gains of 20% from an early June low. This recovery follows a period of significant volatility that left the index as the worst performer among major global benchmarks this year, down 25% and roughly 30% below its peak.

Prabowo Subianto, President of Indonesia, contributed to improved investor sentiment by announcing plans to scale back his ambitious free meals program to prevent fiscal slippage. This move coincided with better-than-expected second-quarter GDP data and cooling inflation. Market stability was further bolstered by S&P Global Ratings affirming the nation's sovereign rating and MSCI Inc. postponing a review of Indonesian equities.

To support the rupiah and attract inflows, Bank Indonesia raised interest rates by 100 basis points across May and June while introducing new incentives. The recent rally was driven significantly by gains in shares from Bank Central Asia and PT Merdeka Copper Gold.