Indonesia has hit one discouraging milestone after another. In the latest example, its position as Southeast Asia's largest stock market has been overtaken by Singapore. The total market value of Indonesia's listed companies has plunged more than 30% from a high in January to $618 billion, while that of Singapore's listed companies has climbed to $645 billion, according to compiled data.
Investor sentiment towards the Indonesian market has worsened in recent months due to uncertainty over the potential reclassification of the stock market as a frontier market and the downgrade of Indonesia's rating outlook to negative by both Fitch and Moody's. Its stock index is at the bottom of similar global markets, while the Indonesian rupiah has hit successive record lows.
Lion Global Investors Ltd. Soh Chih Kai, a portfolio manager at Soh Chih Kai, said the current situation may not be favorable for Indonesia. However, he pointed out that the possibility of recovery cannot be ruled out in the future.
"Nonetheless, this strengthens the relative position of the Singapore market as capital flows continue to reward certainty amid global policy uncertainty," Soh said.
The Singapore stock market has benefited from economic and political stability, as well as government-led market reforms. Singapore's Straits Times Index climbed to a record high this week as the war in Iran triggered market volatility and investors sought safe-haven assets.
In 2026, the Singapore stock market is expected to outperform the Indonesian stock market by its largest margin ever.