Indonesian stocks suffered their biggest drop since 2011, plunging 7.1% on Tuesday, as fears over weak consumer spending and government policies triggered a sharp selloff. The Jakarta Composite Index (JCI) dropped so fast that trading was temporarily halted, while the rupiah weakened 0.5% against the dollar, prompting central bank intervention. Bonds also declined as investors rushed to offload riskier assets.
What’s driving the selloff?
Market uncertainty deepened amid poor consumer confidence data and concerns over government spending priorities. President Prabowo Subianto’s push to fund his populist projects has fueled worries about budget deficits and a 20% drop in state revenues. Traders also pointed to speculation over potential changes in the finance ministry, though the government later denied any leadership shifts. The JCI recovered slightly, paring losses to 3.7%, but sentiment remains weak.
Foreign outflows add to pressure
The selloff adds to months of foreign capital outflows, with investors pulling $1.65 billion from Indonesian stocks so far in 2025. A stronger dollar and rising trade tensions have made riskier markets less attractive, with investors moving toward safe-haven assets. Last week, Goldman Sachs downgraded Indonesian equities, citing weaker earnings growth and a lack of fresh inflows to support the market.
What’s next?
With markets closed from March 28 to April 7, all eyes are on Bank Indonesia’s interest rate decision on Wednesday for potential intervention. If the central bank acts to support the rupiah and stabilize the economy, it could ease market concerns. Until confidence returns, however, Indonesian equities may continue to struggle.
Add a Comment