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• Foreign Funds Return: Inflows Begin to Recover, But Remain Selective

Foreign Funds Return: Inflows Begin to Recover, But Remain Selective

Early October 2025 marked positive developments for Indonesia's financial market.
Bank Indonesia reported foreign inflows worth Rp6.43 trillion during the 6–9 October period, comprising Rp2.48 trillion in the equity market and Rp5.14 trillion in the government securities market (SBN).
These inflows signal an initial indication that global investor interest in Indonesian assets is beginning to rise, albeit on a limited scale.

Fund Movements Remain Tactical in Nature
Looking at the trend throughout the year, foreign capital flows remain selective.
Global investors recorded net selling of Rp53.45 trillion in equities and Rp132 trillion in short-term securities, but net buying of Rp26.46 trillion in government securities.
This pattern reflects a more cautious allocation strategy, prioritising instruments with stable returns while awaiting clarity on interest rates and exchange rates.
With Indonesian government bond yields still attractive compared to other emerging markets, investors tend to capitalise on the opportunity without fully resuming high-risk positions.

Global Risks Still Being Assessed
Despite the inflows, Indonesia's 5-year CDS rose slightly to 78.37 bps from 77.22 bps a week earlier.
This modest increase suggests that positive sentiment has not yet been followed by a reduction in risk premiums.
Global investors are still accounting for external factors such as the direction of Federal Reserve policy, geopolitical dynamics, and rupiah volatility driven by strong dollar flows at the end of the year.
In other words, current inflows do not yet signal a shift in long-term trends, but rather represent short-term portfolio adjustments.

Looking Ahead to Q4: Stability as the Key Factor
Going forward, rupiah stability and consistent government securities returns will be critical factors.
If both are maintained, the potential for additional inflows into the bond market could continue through year-end.
However, with global rebalancing cycles approaching December, market volatility still requires caution.

Conclusion
Foreign inflows at the start of October signal that Indonesian assets remain attractive amid global uncertainty.
However, the direction of foreign funds remains tactical rather than structural in nature.
For domestic investors, this situation underscores the importance of maintaining diversification and capitalising on opportunities from bond market stability without overlooking equity potential in fundamentally sound sectors.