TEMPO.CO, Jakarta - Despite concerns about market pressure, first-day attitudes from investors remain under control following Bank Indonesia's Governor Perry Warjiyo's resignation, according to PT Mirae Asset Sekuritas Indonesia. The market is now expected to shift attention towards the central bank's leadership transition and future policy course.
The securities firm had previously anticipated a larger sell-off, particularly in banking stocks, according to head of Research & Chief Economist at Mirae Asset, Rully Arya Wisnubroto. But investors still exhibit a relatively constructive stance.
"The Jakarta Composite Index (JCI) opened stronger than expected this week," Rully said on Wednesday, July 29, as quoted from Antara, adding that BMRI and BBCA instead strengthen, which reflects investors' "short-term constructive positioning."
According to Rully, this response indicates that market participants have not overreacted to the central bank leadership change. However, this does not mean that the risks have completely subsided.
After the relatively calm initial reaction, investor focus is expected to shift on the BI leadership transition process and the consistency of monetary policies to maintain economic and financial market stability.
"Nevertheless, we see increased future risks, particularly related to the perception of BI's independence potentially shifting towards pro-growth. This could trigger volatility in domestic assets," Rully said.
According to Rully, investor caution is starting to be reflected in rupiah's weakening, which briefly reached Rp18,000 per US dollar before returning to around Rp17,900 per US dollar. At the same time, the yield on 10-year Government Bonds increased to around 7.35 percent, reflecting increased risk premiums in the market.
Meanwhile, Fixed Income Analyst at Mirae Asset, Jessica Tasijawa, said the domestic bond market is currently volatile after BI Governor's resignation.
Prior to this announcement, the bond market had shown improvement supported by inflows of around Rp16 trillion from foreign investors year to date (YTD), increased demand from the banking sector, as well as the role of insurance companies and pension funds as domestic demand supporters.
However, according to Jessica, investor sentiment shifted after the announcement due to doubts about transparency, credibility, and governance in the BI leadership transition process. This condition led to a 9 basis point increase in the yield on Government Bonds, while the rupiah exchange rate returned to around Rp18,000 per US dollar.
"We believe the clarity in the decision-making process, particularly regarding the selection of the new BI Governor, will serve as a crucial factor in determining future policies and providing certainty for the Indonesian market," said Jessica.
Nevertheless, Jessica assessed that Indonesia's bond market fundamentals are still supported by several positive factors, ranging from the retention of Indonesia's S&P Global Ratings and outlook, the re-placement of the State Budget Excess (SAL) funds of Rp200 trillion in state-owned banks, fiscal realizations in the first semester of 2026 exceeding expectations, to the continued inflow of foreign investors into Government Bonds and Government Retail Bonds which are supported by Indonesia's still attractive yield spreads.
Read: Perry Warjiyo's BI Exit: How Did Investors React to Leadership Shift?
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