Despite signs of economic strength, Indonesian equities are under pressure from policy uncertainty. In a recent selloff, the Jakarta Composite Index plunged nearly 4%, prompting a temporary trading halt.
Market participants are growing wary of populist fiscal policies under President Prabowo Subianto and concerns over long-term debt sustainability. Meanwhile, rumors of a potential resignation of Finance Minister Sri Mulyani Indrawati — though denied by the minister — have added to uncertainty. The minister reaffirmed her commitment to maintaining fiscal discipline and keeping the budget deficit under control at 2.53% of GDP.
Another factor spooking investors is currency risk: the rupiah has weakened, and some analysts say the sell-off in equities may signal deeper policy worries.
