Indonesian markets reeled Tuesday, as concerns mounted over weakening consumer spending in Southeast Asia’s largest economy and President Prabowo Subianto’s populist measures.
The Jakarta Composite Index slid as much as 7.1%, the steepest slump since September 2011, sparking a trading halt for the first time since the pandemic. The rupiah weakened as much as 0.5% versus the dollar, prompting the central bank to intervene “boldly” to defend the currency. Bonds also fell.
Market participants were baffled by the sudden drop in equities, which defied gains in regional stocks. Traders attributed the downturn to a mix of factors, including an already weak sentiment fueled by dismal consumer confidence data. Speculation about potential changes in the finance ministry’s leadership further worsened the decline before a government denial.
Indonesian Stocks Slump to Lowest Since 2021
“These kind of concerns are creating more negativity than fundamentals at the moment,” said Sat Duhra, a portfolio manager at Janus Henderson Investors in Singapore.
The JCI Index pared its losses to 3.7% after the government’s denial.
Still, President Prabowo’s push to divert funds into his priority projects has rattled markets, exacerbated by a rare early-year budget deficit and a staggering 20% drop in state revenues. That’s spurred a wave of forced liquidations, particularly among margin traders, said Mohit Mirpuri, fund manager at SGMC Capital.
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“Sentiment is still weak and no fresh inflows to support the market ahead of the long break,” he said. The Indonesian market is shut from March 28 through April 7 for holidays.
The stock market hit a 30-minute temporary suspension earlier in the day after falling through a 5% threshold for the first time since late 2020. The selloff was led by heavyweights PT DCI Indonesia, a provider of data centre services, and PT Bank Rakyat Indonesia.
Fund Outflows
The rout accelerates the downturn in Indonesian stocks, which are among the world’s worst performers this year. A stronger dollar and rising trade tensions have fueled an exodus, with foreign investors yanking about US$1.65 billion from local shares on a net basis so far in 2025.
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“The outflows have been enormous these few days as investors switch back to safe-haven assets,” said Edward Lowis, head of research at PT Sucor Sekuritas. The nation’s equity market fundamentals are also not in a good shape, with earnings growth likely to be muted this year, he added.
Last week, Goldman Sachs Group Inc. downgraded Indonesian equities to market weight from overweight and lowered its recommendations on 10- to 20- quasi-sovereign bonds after they had been among the most-favoured previously.
All eyes are now on Bank Indonesia’s rate decision Wednesday, as investors await a potential intervention to stabilize the currency and boost growth.
