INDONESIA shares plunged about 7% to a 3-1/2-year low on Tuesday as worries over tit-for-tat tariffs, the country's fiscal plans and growth outlook hit sentiment ahead of Bank Indonesia's monetary policy decision.
Jakarta shares sank to 6011.842, their lowest level since September 21, 2021, as the steep selloff prompted a 30-minute trading halt after the index breached the 5% mark. It was last down 6%.
The benchmark index confirmed it was in bear market territory on February 28 after falling over 20% from its record peak on September 19.
"Today's sharp drop feels more like position unwinding and forced liquidations, especially for those trading on margin, rather than a fundamental shift," said Mohit Mirpuri, a fund manager at Singapore-based SGMC Capital.
The sell-off underscores growing investor concerns about the government's spending plans and Indonesia's economic outlook as foreigners exit the stock market.
A nearly 30% drop in Indonesian government revenues in January, as President Prabowo Subianto implements big spending plans, has raised concerns about fiscal sustainability and a potential jump in borrowing.
Investor focus will now be on the policy decision from Bank Indonesia on Wednesday, when the central bank is widely expected to hold rates steady, prioritizing currency stability. Indonesian rupiah is down about 2% this year despite central bank intervention.
"The recent deflation print is raising concerns on the consumption growth story. BI's meeting tomorrow could provide a tactical boost if a rate cut materializes, but the bigger picture remains one of selective positioning rather than a broad-based recovery," Mirpuri said.
Stocks in Indonesia stood out as the sole outlier among Asian equities, most of which joined in a regional rally sparked by China's stimulus plans.
Among other equities, shares in India and Singapore rose more than 1%, each. U.S. Federal Reserve policy meeting on Wednesday will also grab investors attention, where the U.S. central bank is expected to stand pat on rates.
Regional currencies were pressured as investors awaited further directional cues about the economic impact of U.S. President Donald Trump's erratic tariffs.
The South Korean won and the Indonesian rupiah slipped 0.3%, each, while Singapore dollar and Japanese yen lost 0.2%, respectively. - Reuters
