Monthly Market Summary June 2025

APBN 2025 recorded a deficit of IDR204 trillion (-0.8% of GDP) in the first half of 2025. Monthly tax revenue rose by 15.3% MoM to IDR172 trillion, while non-tax state revenue slightly declined to IDR34.2 trillion. On the financing side, the government implemented a front-loading strategy, with total gross issuance reaching 48% of the annual target as of June 2025. Inflation increased to 1.9% y-o-y in June from 1.6% in May, slightly above consensus due to higher food prices, while core inflation remained unchanged at 2.4% y-o-y, in line with expectations. Meanwhile, Indonesia’s PMI remained in contraction territory at 46.9, down from 47.4 previously. Indonesia’s Current Account Deficit narrowed to USD0.18 billion in Q1 2025 (-0.05% of GDP), down from a revised Q4 2024 deficit of USD1.1 billion (0.3% of GDP), and better than the market consensus of USD0.13 billion.

In June 2025, prices of Indonesia’s government bonds denominated in Rupiah continued to rise, with the 10-year yield dropping 21 bps to 6.63%. Similarly, the IDR-denominated government bond index rose by 1.14% MoM. In terms of valuation, Indonesian bonds in IDR remain attractive with a real yield of 4.75%, above the 5-year historical average of 4.07%.

The JCI and MXID fell by 3.46% and 6.07%, respectively. Foreign investors appeared to reduce risk in June amid Rupiah appreciation and falling INDOGB yields. The market remains cautious over the government’s plan to channel loans from state-owned banks to 80,000 Merah-Putih village cooperatives, with loan sizes ranging from IDR3–5 billion. This may worsen ongoing credit cost issues and potentially put pressure on margins amid tight domestic liquidity.

Meanwhile, leading retail stocks outperformed the broader market, and large-cap stocks continue to look attractive.

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