As the rally in AI stocks starts showing signs of fatigue and big investors turn sellers, some are buying back laggards and even warming to Indonesia's battered and unloved stock market.The reprieve comes at a fragile moment for Southeast Asia's biggest economy as the still-looming threat of a downgrade from index provider MSCI has made Jakarta stocks, Asia's worst-performing major stock market this year, down 28 percent.
In contrast, shares in South Korea and Taiwan have surged due to a red-hot AI rally but recent worries about valuations and rebalancing needs have led investors to look at markets that are not as heavily tied to AI plays.
"We've been taking some profit in South Korea and buying Indonesia," said David Chao, Asia-Pacific global market strategist at Invesco in Singapore. "Indonesia is still probably the most under-looked macro growth story play."
Sentiment shifts
While still tentative, sentiment is growing that the worst may be over for Indonesian markets after more than US$4 billion in foreign outflows this year amid MSCI transparency concerns and fiscal worries.
