Indonesia Stock Market Plummets Amid Prabowo Concerns

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  Stocks and Investing on Mon, Feb 02nd, 2026 by The Straits Times
      Locale: INDONESIA

JAKARTA - Indonesia's stock market is experiencing a significant downturn as investors express growing concern over the potential policies of presidential frontrunner Prabowo Subianto and a wider trend of capital shifting towards other emerging markets. The Jakarta Composite Index has fallen 8.3 percent year-to-date, sharply contrasting with the positive performance of other key emerging markets. This underperformance raises questions about Indonesia's economic trajectory as it heads towards a crucial presidential election on February 14th.

While the MSCI Emerging Markets Index has surged by 12.6 percent, India's Sensex boasts a remarkable 17.8 percent gain, and Brazil's Ibovespa is up 10.3 percent. This stark difference highlights a clear divergence in investor sentiment towards Indonesia, placing it firmly at the back of the pack amongst its peers.

Prabowo Subianto, a former military commander currently leading in opinion polls, has signaled a continuation of outgoing President Joko Widodo's policies, but with a notable emphasis on resource nationalism and protectionist measures. This potential shift in economic philosophy is at the heart of the investor anxieties. Concerns center around potential restrictions on crucial commodity exports, particularly in the mining sector, and increased government intervention in key industries.

"The market is pricing in Prabowo's policy direction and there's a feeling of uncertainty around that," explains Satchel Preston, a research analyst at Mandiri Sekuritas. He elaborates that investors are particularly sensitive to Prabowo's stance on exports, specifically regarding potential limitations on nickel and other vital commodities. "The market wants to see continued openness and trade, and that's not guaranteed under Prabowo."

The outflow of foreign investment has been a defining feature of this market slump. Since late last year, foreign investors have been consistently selling Indonesian equities, adding considerable downward pressure on the stock market. Budi Fria Kintomo, an economist at PT Bank Danamon Indonesia, notes, "The exodus of foreign funds has been a significant factor in the market's underperformance." This net selling indicates a loss of confidence in the near-term prospects for Indonesian assets.

However, not all analysts believe the market's reaction is entirely justified. Some argue that the current downturn represents an overreaction, predicting that Prabowo will adopt more market-friendly policies once in office. Alfred Allan, head of equity research at OCBC Sekuritas, suggests, "We believe the market is currently pricing in a worst-case scenario." This viewpoint rests on the assumption that pragmatic economic considerations will outweigh purely nationalist impulses.

Despite these optimistic predictions, the prevailing uncertainty surrounding the election continues to weigh heavily on investor sentiment. The promise of policy continuity offered by Prabowo is overshadowed by concerns about the potential for increased state control and protectionism. His commitment to maintaining nickel exports, while seemingly reassuring, is viewed cautiously as a potentially shifting position depending on domestic needs and geopolitical pressures.

The broader context of shifting investment patterns also plays a role. Global investors are increasingly looking towards emerging markets that offer a combination of growth potential and political stability. While Indonesia historically possessed these qualities, the current election cycle is introducing a degree of risk that is prompting investors to explore alternatives. The legacy of President Widodo, marked by infrastructure development and a focus on attracting foreign investment, is now being assessed in light of Prabowo's stated intentions.

The coming weeks will be crucial in determining the future direction of Indonesia's stock market. A clear articulation of Prabowo's economic policies, coupled with signals of a commitment to maintaining a favorable investment climate, could help to restore investor confidence. However, if uncertainty persists, Indonesia risks falling further behind its emerging market counterparts and hindering its long-term economic growth. The outcome of the election will not only shape Indonesia's domestic policies but also its position within the global economic landscape.