Monthly Market Summary March 2025

On April 2, 2025, US President Donald Trump announced higher-than-expected trade tariffs with global import tariffs of 10%. Indonesia, as one of the exporters to the US, also faced higher-than-expected tariffs of 32%. However, on April 10, 2025, President Trump announced a 90-day delay in the implementation of reciprocal tariffs and increased import tariffs on China to 145%. We expect the CAD deficit to widen mainly due to US tariffs on China and other countries, which could slow the global economic slowdown and further depress commodity prices. 

The price of Indonesian government bonds denominated in Rupiah moved down with the 10-year bond yield increasing by 15 bps to 7.06%. In line with this, the IDR-denominated government bond index moved down by 0.17% in March 2025, driven by global economic trade. On the domestic side, concerns about the direction of fiscal policy have driven market sentiment to be more cautious. Nevertheless, Bank Indonesia remains committed to supporting the stability of IDR bond yields through intervention in the secondary market. 

In March 2025, the MSCI ID rose by 5.7%, outperforming the JCI with a gain of 3.8%. Currently, the JCI valuation is quite attractive at 1.8x price to book and 11x forward price to earnings. There is a risk to be aware of the implementation of US reciprocal tariffs that will be effective in July 2025. We maintain BUY for the Indonesian stock market, with a preference for domestic-oriented sectors, such as consumer, financial, logistics, utilities, and healthcare.