Indonesian equities sank 252 points, or 3.3%, to 7,335 in Monday’s morning session, extending earlier declines and marking their lowest level since mid-July. Sentiment was hit by a sharp sell-off in U.S. futures, as escalating conflict in the Middle East pushed oil prices higher, threatening global growth and dampening risk appetite across Asia.
Investors continued to rotate out of risk assets amid renewed sovereign risk concerns, after Moody’s and Fitch both recently revised Indonesia’s credit outlook to negative. The downside, however, was partly contained by data from China, Indonesia’s largest trading partner: Lunar New Year-related demand drove consumer inflation to a three-year high in February, while producer price deflation eased, tempering fears over external demand.
On the domestic front, Bank Indonesia persisted in deploying external buffers to prevent rupiah volatility from feeding through into inflation and destabilizing financial markets. Losses on the equity market were broad-based, led by cyclical stocks, industrials, and transportation names. Major decliners included Aneka Tambang (-7.7%), Vale Indonesia (-6.9%), Bumi Resources (-6.1%), Telkom (-4.1%), and Astra International (-3.7%).
