Struggle to Revive after a Massive January 2026 Run

The global market in 2026 is already revealing certain trends and configurations: it looks to be defined by a multidimensional polarization, where persistent uncertainty coexists alongside pockets of strong growth. While the overall global economy is predicted to remain resilient, investors are compelled to navigate a fragile landscape, one shaped by uneven monetary and demand for AI technologies fuel a “super-cycle” of investment and earnings growth, transcending geographical and sectoral boundaries. This breathtaking momentum has birthed a new class of winners and losers across diverse industries. Commodities, energy, technology – they could all be shining in this pioneering era, especially with a world divided into two hostile camps: those who wish to hike interest rates, and their adversary, intent on cutting them. As a commodity country clinging to dovish monetary policies, Indonesia could in fact benefit from this macro environment. However, a hammer from MSCI smashed Indonesia’s market into dust within two days of trading – a big risk after a bullish start

Forget IDR risk - the biggest danger may lie in the foundation of the market

Despite an overall positive outlook, the Indonesian market is not without significant risks. The stability of the Indonesian Rupiah (IDR) and the direction of foreign capital flows are the most critical factors for investors to monitor. Vulnerability of the currency arises from several factors, starting with a widening current account deficit, currently projected to grow to 1.2% of GDP in 2026, exerting pressure on the Rupiah as well as factoring in a deviation of Indonesian monetary policy vs. global policy. Taking such factors into consideration, we remain bullish on commodity stocks – likely to benefit from IDR depreciation. While a sweeping Indonesian economy outlook is not as gloomy as that of FY25, we remain Neutral on banks, as we can spot no significant catalyst on loan growth or any other minimum innovation that could rerate them. While commodities get the benefit, we also maintain a positive stance for retail, as a commodity rally could encourage consumers in commodities regions to spend more. Further, a troubling lack of transparency on the Govermment side, as seen in the “flip flop” policy decisions in recent news: i.e., Martabe gold case, the sudden resignation of OJK and IDX leadership, a threat of changes in the boards in Himbara – all showing that our Government is regrettably indecisive, despite a stronger growth outlook. With any catalyst lacking in bond markets, as well as the pressure felt on the equity market, we conclude that the next three months will be very challenging, despite a bull run in the first 3 weeks of January.

Retail - Choosing Where to Spend

Retail - Choosing Where to Spend

Jennifer Henry

Retail Sector

02 February 2026 - 07.57am

Retail - Choosing Where to Spend

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