Macro Update - Geopolitical Relief Fuels Optimism, but Selectivity Remains Key

Geopolitical risks are beginning to ease The U.S.–Iran peace agreement has reduced the geopolitical risk premium that had weighed on global markets in recent weeks. Expectations of a reopening of the Strait of Hormuz and lower risks of energy supply disruptions have pushed Brent crude below USD100/bbl since late May, reaching USD86.8/bbl as of June 12. For Indonesia, lower oil prices are supportive as they help ease import costs, inflationary pressures, and fiscal risks, contributing to the recent appreciation of both the Rupiah and the JCI.

Market gains could continue, but upside may be capped Despite improving sentiment, the sustainability of the market rally remains uncertain. The successful implementation of the U.S.–Iran agreement, alongside the Fed’s policy outlook and the upcoming FOMC decision, will remain key determinants of global capital flows and risk appetite. Domestically, reduced concerns over Indonesia’s market classification ahead of MSCI’s review have also supported sentiment, with continued foreign inflows likely if Indonesia retains its emerging market status.

Investors are likely to remain selective While we see further room for market gains, the recovery is unlikely to be broad-based. Investors are expected to favor fundamentally strong and liquid large-cap stocks such as BBCA and TLKM, which stand to benefit from returning foreign flows. Meanwhile, precious metals producers such as BRMS remain attractive given continued support for gold prices, while consumer names such as MYOR and CMRY continue to exhibit resilient fundamentals despite ongoing concerns over purchasing power.