Indonesia markets tumble as trading resumes after long Eid break amid tariff turmoil
The country was slapped with a 32% tariff hike, stoking concerns that the Jakarta index could tumble further in line with broader regional declines
[JAKARTA] Indonesia’s stock market fell on Tuesday (Apr 8) as trading resumed after an extended break since Mar 28, amid growing concerns over escalating trade tensions triggered by tariff hikes.
The benchmark IDX Composite index tumbled 9.2 per cent at the opening bell, marking the steepest decline among South-east Asian markets and prompting a 30-minute trading halt at 9 am in Jakarta.
The benchmark continued to hover in the red even after the trading halt was lifted, closing down 7.9 per cent at 5,996.14.
Meanwhile, the rupiah took a hit in the spot market, falling 1.8 per cent to an all-time low of 16,890 against the US dollar, making it the weakest-performing currency in Asia.
The trading halt threshold, which was previously set at 5 per cent, was revised to 8 per cent by the Indonesia Stock Exchange (IDX) on Tuesday morning – hours before the market opened – in an effort to cushion against a deeper sell-off.
“The adjustment is aimed at ensuring that securities trading continues in an orderly, fair and efficient manner,” the IDX said.
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The bourse also relaxed the limit on individual stock declines for mainboard-listed equities, increasing the auto-rejection threshold to 15 per cent from the previous 10 per cent cap.
Post-break shock
The bourse’s decision comes amid a broader regional market sell-off, fuelled by rising trade tensions after US President Donald Trump announced steep tariff hikes on numerous countries in Asia on Apr 2. Indonesia was hit with a 32 per cent tariff increase.
During a meeting with economists on Tuesday, Indonesian President Prabowo Subianto, though not directly referencing the US, remarked that tariff policies have raised concerns among many nations about the future trajectory of the global economy.
Alongside its Asean counterparts, Indonesia has ruled out retaliating against US tariffs. Instead, the country plans to lower non-tariff barriers, increase imports of US goods, and relax local content requirements for specific products.
Since the “Liberation Day” announcement, Indonesia has managed to weather the storm, with the stock exchange’s closure during the Eid holiday offering a brief respite from market turmoil. But now, the shadow of Trump’s tariff hikes looms large, amplifying the already negative sentiment.
The uncertainty surrounding Prabowo’s policies has only deepened the storm, contributing to a market that has already shed more than 15 per cent of its value this year.
Ari Jahja, head of research at Macquarie Capital, said in a note that the market is still digesting a series of recent policy shifts.
“Macroeconomic conditions remain sluggish. The new tariffs will likely accelerate the need for structural reforms and help address the risks tied to the trade surplus,” he wrote.
Large-cap stocks, including banking giants such as Bank Rakyat Indonesia, Bank Central Asia and Bank Mandiri, along with telecom giant Telkom Indonesia and data centre company DCI Indonesia, came under intense selling pressure on Tuesday.
As the rupiah approached its weakest level since the Asian financial crisis, Bank Indonesia said it has intervened in the offshore non-deliverable forwards market on Monday to stabilise the currency. The central bank signalled its readiness to take “aggressive” action in the onshore market on Tuesday.
Goldilock zone
Investor concerns are mounting over the potential impact of a trade war, which could erode Indonesia’s trade surplus and further pressure the rupiah against the US dollar.
Analysts said this has led many to avoid stocks of companies with significant exposure to exports and dollar-denominated transactions.
However, Satria Sambijantoro, head of research at Bahana Sekuritas, stated that with minimal exposure to global trade, Indonesia is actually in the “Goldilocks” zone – benefiting from lower oil prices, a pullback in global interest rates and a domestically driven macroeconomic backdrop.
For Indonesia, exports to the US make up just 2 per cent of the country’s gross domestic product, representing the smallest macroeconomic exposure in South-east Asia. In comparison, other regional economies such as Thailand and Malaysia have a much higher dependency on US exports, at 11 per cent and 10 per cent of gross domestic products, respectively.
He argued that Indonesia’s domestic-focused economy makes it less susceptible to global trade shocks, with a V-shaped market rebound likely, supported by global liquidity.
“There’s also the potential for both foreign and local institutional buyers to step in, as cash levels are high following equity sales that were front-loaded ahead of the extended Eid holiday,” Sambijantoro added.
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