Indonesian companies continue to demonstrate strong business fundamentals despite mounting concerns over the country’s capital market governance, sovereign fund Danantara Indonesia CIO Pandu Sjahrir said, urging investors to distinguish between market integrity issues and corporate performance.
In a LinkedIn post on Friday, Pandu said Indonesia’s capital market reforms were necessary to build a more transparent, fair and trusted market, while stressing that the strength of listed companies should be assessed objectively.
His remarks came as Indonesia faces renewed scrutiny from global index provider MSCI over market transparency and investability, raising concerns about the country’s standing in international equity benchmarks. Pandu said the concerns should be taken seriously, given their potential impact on the country’s 32 million capital market investors.
“At the same time, we need to distinguish between issues of market governance and the fundamentals of companies.” he wrote in the post.
“The market should be fixed, by all means, but the business strength of Indonesian companies should still be assessed objectively,” he added.
Pandu cited data showing that 134 of 146 listed companies with annual revenue exceeding IDR 5 trillion ($276 million) recorded profits. Their aggregate profits grew 15 percent in the first half of 2026 from a year earlier, while revenue increased 7 percent.
Meanwhile, 121 non-financial issuers held a combined IDR 583 trillion in cash in the second quarter of 2026, up 13 percent year on year, providing capacity to finance business expansion.
He also pointed to opportunities among companies trading at valuations he described as attractive. Of the 146 companies, 61 recorded return on equity above 15 percent. Some businesses in the banking and consumer sectors generated returns on equity of around 20 percent while trading at price-to-earnings ratios below 10 times.
Pandu said investors should assess companies based on their profitability, business growth, cash flow, debt levels and corporate governance, rather than assuming that falling share prices automatically make stocks cheap.
FTSE Russell, meanwhile, retained Indonesia’s classification as a Secondary Emerging Market, while continuing to monitor the implementation and effectiveness of the reforms.
Pandu also expressed support for the reform efforts led by Indonesia’s Financial Services Authority (OJK), the Indonesia Stock Exchange, Bank Indonesia and the Ministry of Finance, alongside other stakeholders.
“Ultimately, capital market reform will not be completed overnight, but it must be consistent and deliver visible results,” he said.
Pandu advised investors to stay optimistic while remaining disciplined, understanding the businesses they invest in, diversifying their portfolios and matching investments to their individual risk profiles.
He said Indonesia was moving in a better direction, although further work remained to restore confidence and strengthen the capital market.
GIC, Temasek reject claims of pressuring MSCI over Indonesia downgrade – report