The Jakarta Composite Index (IHSG) climbed to an all-time high on Thursday (Aug 14, 2025), closing at 7,931.25 and breaking the previous record of 7,910 set in September 2024. Throughout the session, the index stayed in positive territory, peaking at 7,973.98 before easing slightly at the close. The increase extends a more than 4% rally since early August.

Trading on the Indonesia Stock Exchange (IDX) was active, with 42.1 billion shares changing hands across 2.14 million transactions, valued at IDR 18.7 trillion. The momentum was fueled by capital inflows from both domestic and foreign investors, including major injections into conglomerate stocks.

According to University of Indonesia economist Budi Frensidy, just five conglomerate shares, among them PT DCI Indonesia Tbk (DCII), PT Dian Swastatika Sentosa Tbk (DSSA), PT Chandra Asri Pacific Tbk (TPIA), and PT Chandra Daya Investasi Tbk (CDIA), contributed disproportionately to the index’s rise.

He said that without the movement of these large-cap stocks, the IHSG would not have moved far from its early-year level—likely staying around 7,200. According to him, this phenomenon shows that the IHSG’s rise does not represent the fundamentals of all economic sectors on the exchange.

“So, this increase does not reflect the overall economic fundamentals or all sectors in the market. It is only the conglomerate stocks, which are also not spread across sectors—perhaps only two or three sectors are experiencing significant gains,” he told SUAR on August 14, 2025.

He added that some of the sectors supporting this rise include technology, petrochemicals, and banking. These stocks carry the largest weight in the index, so significant price increases in them can strongly boost the IHSG.

Although the IHSG has set a record, Budi Frensidy doubts this will significantly attract foreign investment. In fact, he believes that even if investors are interested, the large gains will likely only be enjoyed by holders of big-cap stocks. He also noted that this increase cannot yet be considered a definite positive signal for overall economic progress.

For listed company entrepreneurs who had previously conducted share buybacks when prices corrected, the IHSG reaching a record high brings positive impacts. He explained that the share buybacks carried out have generated profits, which in accounting are recorded as additional capital.

The rise in the IHSG and the positive market sentiment have increased the valuation or market capitalization of companies. He estimates that this moment will be used by issuers who have already gained additional capital to release their buyback shares and realize profits.

Therefore, Budi Frensidy hopes that the capital market’s rise will not be driven solely by a handful of conglomerate stocks. He encourages both institutional and retail investors to start looking at other stocks with strong fundamentals.

According to him, many fundamentally solid stocks have not yet been affected by this increase. Moreover, most conglomerate stocks are no longer considered cheap in terms of valuation.

“If the stocks that are currently rising can hold their position, I think that’s already good, because it would keep our index from falling below 7,900. But it would be even better if other stocks with good fundamentals also went up,” he said.

He added that if the price trend of these big-cap stocks is followed by other stocks, the IHSG has the potential to break through the 8,000 level or higher.

If the price trend of these big-cap stocks is followed by other stocks, the IHSG has the potential to break through the 8,000 level or higher.

Global Sentiment

Meanwhile, Herditya Wicaksana, a capital market analyst at MNC Sekuritas, believes that the inflow of global capital has been a driving force behind the rise of the IHSG. He noted that there are several other factors contributing to its strengthening, both global and domestic in nature.

"We estimate that several factors are pushing the IHSG’s movement, including rising expectations of a Fed interest rate cut in September 2025," he told Suar (14/8/2025).

He added that the probability of this rate cut has reached 95%. In addition, the extension of the trade war truce between the U.S. and China until November 2025 has also helped boost market strength.

From the domestic side, he noted that market participants have picked up signals of policy support and coordination from the government and regulators to maintain the momentum of the IHSG’s strengthening. With this new record high, the psychological level of 8,000 has now become a short-term target.

According to Herditya, the inflow of capital into Indonesia’s stock market indicates that the country’s investment climate is quite attractive for both domestic and foreign investors. He observed that the recently released Gross Domestic Product (GDP) data, which stood at 5.1%, has also helped boost market and investor optimism.

Furthermore, Herditya predicted that this all-time high achievement would prompt issuers to review their share buyback policies. He hopes the IHSG’s strengthening can continue and have a positive impact on issuer performance in the future.

The Chief Executive of the Supervision of Capital Markets, Derivatives, and Carbon Exchange (PMDK) at OJK, Inarno Djajadi, welcomed the potential for IHSG strengthening. This enthusiasm reflects confidence in the stability of the national economy and the improving performance prospects of Indonesian issuers.

However, it is important to note that the IHSG’s movement is heavily influenced by various factors—both domestic and global—as well as the performance of the issuers.

Market euphoria still needs to be accompanied by caution and sound risk management.

"We remind that market euphoria still needs to be accompanied by caution and sound risk management," he said.

From the regulator’s side, they continue to ensure that the market operates in an orderly, fair, and efficient manner. The OJK also encourages the creation of a healthy and high-integrity capital market ecosystem so that the potential growth of the IDX Composite and other instruments can be achieved sustainably, not merely due to short-term momentum.