"Sell-off in Indonesia" Trade Ravaging Market, President Prabowo's Tough Control Policies Intensifying Concerns.

As the Indonesian stock market plunges at the fastest rate globally, its currency hits a historic low, and global investors are rapidly losing confidence in Indonesia. The benchmark index, after hitting a historic high just five months ago, has already dropped by 36%, becoming the worst-performing market among the more than 90 global indices tracked by the media this year. Meanwhile, the Indonesian rupiah has depreciated by over 7%, with foreign investors pulling out billions of dollars from the Indonesian bond market. For this commodity-rich country, its former status as a major destination for asset allocation for many emerging markets has undergone a dramatic change. What makes investors uneasy is President Prabowo's increasingly populist and interventionist policy agenda, which is strengthening, as Indonesia has long been seen as a country friendly to foreign investors. George Boubouras, research director of hedge fund K2 Asset Management, managing around $4.3 billion in assets, said the biggest trade in Asia right now is "selling Indonesia." After investing locally for decades, he has completely divested all holdings by 2024. "I have no exposure to Indonesia," he said. "I will not give them any more chances." The Indonesian rupiah broke the historic 18,000 level on Thursday, and the options market also indicates further declines. Traders believe there is a 45% chance of the rupiah falling to 19,000 by December, and a 27% chance of it falling to 20,000 a year from now.