KIWOOM Morning Equity – 16 October 2026 This document is for information only and for the use of the recipient. It is not to be reproduced or copied or made available to others. INFLATION AND GEOPOLITICAL RISKS RISE, MSCI THREAT AND FISCAL PRESSURES CLOUD INDONESIA US MARKET: Wall Street closed mixed on Thursday (15/10/26), with S&P 500 rising 0.3%, Nasdaq Composite closing relatively flat, and Dow Jones Industrial Average strengthening 557 points. The recovery came after selling in AI infrastructure stocks began to ease following a statement from Nvidia CEO Jensen Huang, who denied concerns that CoreWeave would need a bailout from Nvidia. Microsoft rose 1.1% and Oracle strengthened 3%, while Broadcom fell 0.6%, AMD weakened 1.5%, and Nvidia corrected 1.8%. INDONESIA: MSCI officially opened a consultation to reclassify the MSCI Indonesia Indexes from Emerging Market (EM) status to Standalone Market status across all relevant global and regional composite indices. MSCI affirmed that the plan would proceed unless clear evidence emerges of material improvement in Indonesia's governance and market functioning. Since January 2026, MSCI has frozen part of its Indonesian index changes after investors flagged a lack of transparency in ownership structures and alleged coordinated trading. Although authorities have announced reforms, including disclosure of ownership above 1%, more detailed investor classification, High Shareholding Concentration (HSC) reporting, and a roadmap to raise the minimum free float to 15%, market participants assess that implementation has not been consistent and has not been accompanied by significant law enforcement. If the reclassification is realized, Indonesia risks experiencing foreign fund outflows, stock selling pressure, and increased volatility. - On the other hand, government debt interest expense in the 2027 state budget is projected to reach Rp650.31 trillion, or 18.93% of state revenue, potentially narrowing fiscal space. S&P Global Ratings still maintains Indonesia's rating at BBB with a stable outlook, but an interest to general government revenue ratio persistently above 15% is a risk that needs watching. A 50–100 bps rise in risk premium could add around Rp9–18 trillion per year in interest expense as new government bonds (SBN) are issued. Because of this, the government needs to strengthen tax revenue, improve spending productivity, control new debt, and maintain fiscal credibility and consistency in market reform to preserve investor confidence. - Meanwhile, domestic CPO consumption is projected to surpass exports in 2026, with respective shares of 51.3% and 48.7% of total national palm oil usage. IPOSS estimates domestic consumption will rise 7.4% to 27.1 million tons, driven by the implementation of the mandatory B50 biodiesel program since July 2026, while palm oil product exports are projected to fall 15.4% to 25.76 million tons. National palm oil production is estimated to reach 52.4 million tons, growing 1.86% YoY. IPOSS Director Nanang Hendarsah said that the rising need for biodiesel must be balanced with increased production and productivity so that energy security does not further squeeze export capacity. The decline in exports could also potentially reduce Export Levy revenue, which is a funding source for the biodiesel program and the Smallholder Palm Oil Replanting (PSR) program. JCI closed down 1.33% at 5,863.78 in Thursday's (15/10) trading, amid market pressure that was also marked by a weakening Rupiah, which broke through Rp18,029 per US Dollar. Nonetheless, foreign investors still recorded a net buy of Rp520.03 billion in the regular market and Rp567.96 billion across all markets. However, on a cumulative basis since the start of the year, foreign investors still booked a net sell of Rp110.77 trillion. Foreign buying mainly flowed into BBCA, BBRI, DSSA, TPIA, BMRI, CUAN, ANTM, ACES, SQMI, and PWON shares, while the largest selling pressure was concentrated in ITMG, GOTO, TLKM, EMAS, ADRO, BRPT, PACK, PTBA, ADMR, and INCO. Technically, JCI is currently testing support at the 5,828 level, with RSI (14) falling to 30.4, indicating conditions nearing oversold. If it can hold above that level, JCI has the chance of a rebound toward resistance at 5,910, 5,943, and 5,973. Conversely, if support at 5,828 is breached, corrective pressure could continue to close the gap in the 5,805 – 5,744 and 5,704 – 5,695 areas, with the 5,700 level becoming the next psychological support. If that level is also broken, JCI risks weakening further toward 5,300, which is the previous low area. KIWOOM RESEARCH recommends a buy on weakness strategy or a wait and see approach if upward momentum has not yet appeared. JCI is expected to move sideways to correct more deeply, while foreign selling pressure and volatility could continue amid uncertainty over Indonesia's MSCI status.