BRIDS Market Pulse

In the Spotlight

 

• Market and Sector Performance

JCI fell 8.7% w-w to 5,594, the worst weekly decline of 2026 and the index’s lowest level since May21, extending the YTD loss to c.35.3%. The selloff was largely domestically driven, as most Asian markets were broadly resilient earlier in the week. Meanwhile the tech-led regional pullback on Friday (KOSPI -5.5%, Nikkei -1.3% on) was followed by US market corrections on higher-than-expected NFP data.

 

Indonesia’s underperformance reflected a cluster of domestic events in a short week: DPR’s passage of the revised UU P2SK on June 4 (expanding BI’s mandate and introducing DPR oversight), and the Rupiah breaching Rp18,000/USD for the first time.

 

The biggest negative point contributors were large cap BBCA (-11.0%), BBRI (-7.1%), TLKM (-8.9%), BRPT (-23.7%), and BMRI (-5.9%, -18.9pts). On the upside, MSCI-deletion conglo names staged a partial recovery: SMMA (+11.3%), BREN (+8.8%), DSSA (+24.0%), AMRT (+9.1%).

 

On BRIDS coverage, every sector closed lower w-w. Worst performers: Poultry (-20.7%), Cement (-13.4%), Media (-12.9%), Utility (-12.4%), Property (-10.3%), Telco (-9.6%), Banks (-8.9%). Relative outperformers (still negative): Oil & Gas (-0.7%), Retail (-3.5%), Technology (-5.2%).

 

On our prior strategy report, last week we argued the JCI EY-bond spread at 242bps had priced in a bear scenario. The market disagreed with this as this week’s selloff has pushed the spread further by 83bps to c.325bps (JCI 5,594 on ~10.0x FY26E vs 10Y SBN at 6.75%). The structural view that the bear case is priced in remains directionally correct, but UU P2SK and policy noises have added a new risk premium not in our prior framework.

 

• Foreign Flows

Foreign investors remained heavy net sellers. YTD cumulative equity outflows now exceed US$3.7bn (>Rp67tr at current 18,000/USD), with this week’s outflow broad-based rather than MSCI-mechanical. Foreign selling concentrated again in the most-owned large-caps (BBCA, BBRI, TLKM, BMRI), repeating last week’s pattern of liquid de-risking instruments being sold. Contrary to our view that foreign flows may see exhaustion, foreign selling in banks and large-cap accelerated post-rebalance. On the inflow side, modest buying continued in commodity-linked names (MDKA, UNTR, EMAS). Regionally, Indonesia continues to diverge: Taiwan, Korea, and India saw YTD inflows.

 

• Indonesia Policy and Macro Watch

The week’s dominant event was DPR’s passage of the revised UU P2SK. The revision introduces two material governance changes for BI: a formal DPR mechanism to evaluate BI’s performance, and an expanded BI mandate to include supporting sustainable economic growth and job creation, though officials insisted BI independence remains intact.

 

Government Regulation (PP) No. 24/2026, signed by President Prabowo on May 20 and effective June 1, set the legal framework for the single-exporter scheme operationalised through PT Danantara Sumberdaya Indonesia (DSI). We noted three points from the detais of the PP: First, Article 3(2) explicitly grants DSI the authority to set both the export selling price and the margin (within "reasonable" limits) hence, is the more negative reading the market had been pricing. Second, the transition runs from 1 June to 31 December 2026 with a formal evaluation after the first three months. This implies that full implementation could be deferred beyond 1 January 2027 or delayed effectively indefinitely (though this is not a base case). Third, the regulation opens an exemption pathway for companies that hold a government contract containing investment, divestment, and domestic processing/ refining commitments. This marks a potential loophole, though access hinges on the scope of investment commitment, so practical exemption is uncertain at this stage and likely company-specific.

 

On macro data: May26 Manufacturing PMI recovered to 50.0 (April: 49.1) but driven partly by inventory pre-loading rather than demand recovery, with export orders contracting for a third straight month. Apr26 trade surplus narrowed sharply to US$0.09bn (Mar26: US$3.32bn) as imported oil and gas costs surged; May headline CPI rose to 3.08% yoy, approaching the upper end of BI’s 1.5–3.5% target.

 

The S&P review window in July 2026 remains a binary overhang on near-term sovereign risk. Our base case has been an outlook cut from stable to negative, joining Moody's (Baa2 negative, Feb26) and Fitch (BBB negative, Mar26), with any actual rating downgrade typically requiring a 12–18 month cure window.

 

A separate article flagged that the government is preparing to review RKAB (mining work plan and budget) quotas during mid-2026, with the formal revision window opening in June–July as previously signalled by ESDM. Recall that ESDM cut RKAB 2026 quotas significantly versus proposals: coal target around 600mt (vs 2025 realisation of 790mt) and nickel ore cumulative quota at 260–270mt (vs 379mt in RKAB 2025). The cuts were aimed at supporting global commodity prices by managing supply but have created stress points — Vale Indonesia (INCO) had its proposed quotas cut by 68–74% at Bahodopi and Pomalaa, several nickel mines reportedly hit their quota by May 2026 and faced shutdowns, and smelter feed shortages are now squeezing downstream margins.

 

• TLKM (Buy, TP lowered to Rp3,750): 1Q26 earnings missed as ARPU resilience offset by margin trade-off. Post 1Q26 earning call, we noted that 1Q26 EBITDA margin miss at 48.3% was driven by O&M overshoot, driven by thin-margin gaming voucher sales (5-6% GPM). While Mar26 exit ARPU reached Rp47k, validating market repair, IndiHome’s soft ARPU at Rp204k drives revenue cuts in FY26-28F. We lower our TP to Rp3,750 on 3.7-5.4% EBITDA cuts, implying 5.4x FY26F EV/EBITDA. Management indicated that capex guidance is under review, translating to further risks.

 

• War Watch

The Iran-US conflict narrative remained volatile this week, providing no net relief yet for EM oil-importer sentiment. Despite Trump’s June 2–3 statements that talks were “going very well,” Iranian FM Araghchi countered that no “significant progress” had been made, and the two sides resumed exchanging strikes. CENTCOM reported that US forces shot down Iranian attack drones threatening the Strait of Hormuz on June 6, while Iran condemned the action as a ceasefire violation. Israel and Lebanon reached a provisional ceasefire on June 4 contingent on Hezbollah withdrawal from southern Lebanon, but Hezbollah rejected the deal. Pakistan continues to mediate; its Interior Minister visited Tehran on June 6.

 

• Commodities

Brent crude ended the week at c.US$93–95/bbl, up roughly 4% w-w on the fresh US-Iran exchange of strikes, but still well below the April ICP peak of US$117/bbl.

 

Thermal coal prices were broadly stable: Newcastle around US$132/t (flat), ICI-3 at c.US$85/t, ICI-4 at c.US$66/t; China port inventory at c.1,963kt, supportive for seaborne sentiment.

 

Precious metals: sharpest weekly retreat in over a month. Gold spot fell below $4,370/oz on Friday, down nearly 4% w-w and hitting the lowest level of 2026 (down 6.8% over the past 4 weeks). Silver was hit harder, falling below $70/oz, down over 7% w-w to its lowest since late March. The trigger was a much-stronger-than-expected May US nonfarm payroll report (+172k vs 85k consensus, unemployment steady at 4.3%, wage growth 3.4%), which flipped Fed expectations from rate cuts toward potentially a hike by year-end, lifting the dollar and real yields.

 

Base metals: slight divergence from precious metals despite a similar Friday selloff.

LME copper closed near $6.26/lb (~$13,700/ton) on Friday, down 3.8% on the day and -3.0% on the 3M close after hitting fresh record highs earlier in the week. The pullback was driven by Fed rate-hike repricing post-NFP (mirroring precious metals). Supply-side factors remain constructive as Chile's Apr26 output was the weakest in 23 years, and potential US copper import tariffs are driving pre-positioning shipments into US ports, keeping the structural narrative intact (copper still +30% YoY).

 

LME nickel closed at $18,689/ton (-1.0% on Friday, -3.3% MoM, but +19.9% YoY), having actually recovered above $19,000 earlier in the week on reports of additional Indonesian output cuts. The nickel story remains constructive on supply: declining LME inventories, Zimbabwe export restrictions, Indonesia RKAB-driven ore quota tightness, constrained MHP availability.

 

LME tin held firm near $57,400/ton (-1.0%) with no fresh directional catalyst.

 

• Week Ahead: Key Catalysts

Watch for UU P2SK implementing regulations: monitor BI’s communication on operational independence and any concrete signal of fiscal-monetary coordination scope. 2) MSCI Market Accessibility Review on Jun 19. 3) Rupiah and BI intervention: 3) War/Hormuz headlines: oil sensitivity to any progress or breakdown in US-Iran talks remains the marginal external driver. 4) Economic data: Indonesia May26 foreign reserves; US May CPI (Wed, 11 Jun); China May trade and CPI data.

 

 

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