The Jakarta Composite Index (JCI) fell more than 7 per cent around midday on Tuesday but recovered after the halt to decline by 3.8 per cent to 6,223.39 at the end of the trading day, its lowest mark since September 2011. The index is one of the world’s worst performers, having fallen 14.8 per cent over the past year.
Foreign investors have withdrawn US$1.6 billion from Indonesian equities on a net basis so far this year amid global pressures stemming from a strong US dollar and intensifying tensions between Washington and its trading partners.
The Indonesian rupiah has become Asia’s worst-performing currency after having fallen against the US dollar by 2 per cent this year as of Tuesday. Last month, the currency traded at near four-year lows after Indonesia recorded its first drop in consumer prices on an annual basis in more than two decades.
Economists have cited several factors fuelling the huge drop in share prices including concerns over the country’s financial plans and economic outlook and speculation that Finance Minister Sri Mulyani may resign from Prabowo’s cabinet.
“From a policy perspective, a significant number of investors remain uncertain due to a lack of clarity, leading to heightened uncertainty and triggering a risk-off sentiment,” said Josua Pardede, chief economist at Indonesia’s Permata Bank.
