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Weekly Insight

Rebalance Shock

18 May 2026
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Rebalance Shock
Rebalance Shock

Global Markets

Global markets were volatile last week, the AI rally (the “Magnificent 7”) continued to provide support but weakened toward the end of the week due to higher U.S. inflation, rising yields, and strong oil prices, with sentiment split between AI optimism and interest rate concerns; Next week’s focus is on the Fed’s transition to Kevin Warsh, Nvidia’s earnings, as well as UK PMI and CPI data and the FOMC Minutes, with markets expected to trade sideways and remain volatile as they await policy direction.


Indonesian Markets

Last week, the Indonesian market was generally bearish and volatile. The JCI weakened due to foreign outflows, a stronger USD, rising global yields, geopolitical tensions, and additional pressure from MSCI’s reclassification of six large-cap stocks to small-cap, while the Rupiah also weakened temporarily. Nevertheless, domestic fundamentals remain solid, with economic growth at 5.6% YoY. Next week is expected to be sideways with a negative bias, with the main focus on the BI RDG (May 19–20), which will be the primary catalyst for the direction of the Rupiah and the IHSG, where BI is expected to hold at 4.75% or potentially raise.


Weekly Highlight on Economic Indicators


Our Take:

JCI dropped 3.53% WoW to 6,723, driven by a foreign outflow of Rp3.2 trillion, primarily due to the MSCI rebalancing that removed six major stocks (AMMN, BREN, TPIA, DSSA, CUAN, AMRT). Pressure was exacerbated by U.S. inflation at 3.8%, a strengthening USD, rising global yields, and a weakening Rupiah. The impact was a 4.68% decline in market cap and reduced liquidity, signaling a risk-off market.

Investment recommendations for our investors (in order of preference):
Fixed Income Fund > Money Market Fund > Balanced Fund > Equity Fund


Author : KBVAM Investment Team

Source: Bloomberg, Infovesta, Trading Economics

DISCLAIMER :
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This document was prepared based on information from reliable sources by PT KB Valbury Asset Management. PT KB Valbury Asset Management does not guarantee the accuracy, adequacy or completeness of the information and materials provided. PT KB Valbury Asset Management Indonesia is not responsible for any legal and financial consequences arising, whether against or suffered by any person or party and in any way deemed to be a result of actions taken on the basis of all or part of this document.