Foreign Investors Dump Rp 54 Trillion in Indonesian Stocks, Analysts Cite Currency and Policy Uncertainty
Key Takeaways
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JAKARTA, Investortrust.id — Foreign investors continue to withdraw funds from Indonesian equities as heavy selling hits top-tier banking stocks, traditionally the cornerstone of foreign portfolios. The sell-off, which has reached Rp 54.76 trillion, or US$ 3.3 billion, as of early October 2025, is expected to persist through year-end until signs of recovery emerge in the banking sector.
According to data from the Indonesia Stock Exchange, the largest outflows have been recorded in blue-chip financial stocks such as Bank Central Asia (BBCA), Bank Mandiri (BMRI), and Bank Negara Indonesia (BBNI).
MNC Sekuritas analyst Herditya Wicaksana said the foreign exodus reflects both global headwinds and domestic uncertainty surrounding policy direction.
“The massive net sell also stems from the decline in key performance indicators of major banks. We expect outflows to continue if company fundamentals and policy signals remain unsupportive,” Herditya told Investortrust on Wednesday, Oct 8, 2025.
VP of Marketing, Strategy and Planning at Kiwoom Sekuritas Indonesia, Oktavianus Audi, said several factors are driving the sustained capital flight. Chief among them is the weakening rupiah amid a narrower interest rate differential after Bank Indonesia (BI) cut its benchmark rate by 25 basis points to 4.75%, while the Federal Funds Rate remains elevated.
“This condition has prompted foreign investors to reduce their equity exposure,” he said.
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He added that uncertainty surrounding BI’s burden-sharing scheme with the government and fears of a widening fiscal deficit have weighed on sentiment. Meanwhile, Indonesia’s economic recovery has been slower than expected despite a series of rate cuts, as domestic demand remains subdued.
Political and social instability following recent demonstrations has also eroded foreign investor confidence, Audi noted. “Investors are becoming more conservative, reallocating to safe-haven assets like gold, which has hit an all-time high,” he said.
At the same time, the benchmark Jakarta Composite Index (JCI) continues to climb to record highs, led by conglomerates in the technology and energy sectors, supported by global index rebalancing such as MSCI and FTSE. However, the financial sector remains the main drag on the LQ45 index.
Despite the sell-off, large-cap LQ45 stocks are expected to remain stable to positive in the medium term, supported by monetary easing that may lower funding costs and boost expansion. Stronger Q3 and Q4 2025 earnings could also trigger sectoral reallocation through window dressing.
Emerging Market Trend
Indonesia is not alone in facing foreign sell-offs. Other emerging markets have also experienced significant outflows this year.
Data as of Oct 3, 2025, show that India led the region with US$ 17.43 billion in net outflows, followed by Vietnam at US$ 3.92 billion, Malaysia at US$ 3.58 billion, Indonesia at US$ 3.4 billion, and Thailand at US$ 2.86 billion. In contrast, Singapore’s stock market still recorded a net inflow.