In August, Indonesia continued its encouraging macroeconomic indicators. The first highlight of the month is BI rate cut amounting to 25bps, bringing the rate into 5%. The cut, which was outside of the consensus view, was additionally encouraging as the governor maintained a dovish stance, looking for additional rooms to cut in a bid to support national economic growth. Further BI rate cut may also increase in possibility if the Fed does cut rate in September as per market expectations.

Trying to address weak purchasing power, the government is also expected to rollout digital subsidies (bansos digital) in September 2025, with initial trial in Banyuwangi, East Java. If successful, the program will be implemented nationally in January 2026. Unlike previous traditional subsidies, the program will utilise Payment ID to ensure recipients can only buy important commodities such as rice through the application barcode. The digitalisation will also create better verification process by ensuring more accurate targeting, with potential recipients needing to confirm their identity via digital national ID or through field agents. We think a successful rollout will be very beneficial, given the common issues of traditional subsidies, including diversion of the fund into online gambling or disbursement into inappropriate recipients, will be partially resolved. We note however the main issue for the program is the requirement to have a bank account, as Indonesian population is generally underpenetrated by the banking system.

Although August was closed with national protest borne from the tragic incident involving Affan Kurniawan, an online ride-hailing driver, we maintain that economic fundamentals of the country remain unaffected. Given the range of positive sentiments such as the BI rate cut and pro-growth stance, once socio-political conditions stabilise, we think the equity market will be in a position for a year-end rally.

 

Product Recommendation

 

EQUITY FUND
MITRA A	MITRA invests in majority domestic stocks, with a focus on Big Cap stocks. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the equity portfolio.
MICB A	MICB primarily invests in stocks included in the LQ45 index. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the equity portfolio.
BALANCED FUND
MIA	MIA invests in Equities, Bonds and Money Market with Medium Term and categorized Medium Risk. Investors bear the risk associated with the equity portfolio.
MISB	MISB invests in Sharia Equities, Sukuk and Money Market Sharia with Medium Term and categorized Medium Risk. Investors bear the risk associated with the equity portfolio.
EQUITY INDEX AND ETF FUND
FTSE ESG A	FTSEESG primarily invests in stocks included in the FTSE Indonesia ESG Index. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the equity portfolio.
XMLF	Mandiri ETF LQ45 is an ETF that invests in blue-chip stocks listed in the LQ45 Index. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the portfolio of these stocks.

 

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Mandiri Investasi Website – www.mandiri-investasi.co.id

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The opinions expressed in the article are for general informational purposes only and are not intended to provide specific advice or recommendations for individuals or specific mutual fund or investment products. It is intended solely to provide education about the financial industry. Views reflected in the content may change at any time without notice. All performance data and investment returns mentioned in this article cannot be used as a basis for calculation to buy or sell a mutual fund. This data is performance records based on historical data and is not a guarantee of future mutual fund performance. Investment through mutual funds carries risks. Investors are required to read and understand the prospectus before deciding to invest through mutual funds.

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