Emerging Markets: Indonesian stocks sink to 2020 lows, rupiah breaches 18,000

DBS group

04/06/2026 06:50

Rupiah hits 18,045 per dollar  
Jakarta share index tumbles 5%, at lowest since Dec 2020
JCI 2-day declines at 9%
Most EM Asia stocks retreat from record close
Updates at 0427 GMT
By Sneha  Kumar

    June 4 (Reuters) - Indonesian stocks plunged 5% to their lowest in more than five years on Thursday, while the rupiah breached the 18,000 level as a shrinking trade surplus due to elevated oil prices exacerbated concerns over the country's already deteriorating fundamentals.
Equities in most emerging Asian markets slid from record highs as renewed fighting between the U.S. and Iran rattled investors, although oil prices eased on a ceasefire deal between Israel and Lebanon.
The MSCI gauge of EM Asia stocks .MIMS00000PUS fell about 2% from record highs, largely dragged lower by stock markets in South Korea .KS11 and Taiwan .TWII, which make up more than half of the index.
        
CONFIDENCE CRISIS IN INDONESIA     
The Indonesian rupiah IDR= tumbled to a record low of 18,045 per dollar on the day, and has now lost more than 7.5% this year to overtake the Indian rupee INR=IN as the worst-performing currency in the region.
Indonesia's Jakarta Composite Index .JKSE sank 5% to its lowest since December 2020, extending its year-to-date decline to more than 33%, the steepest fall among emerging market equity indexes.
"A weaker rupiah raises concerns over inflation, higher funding costs, and reduced policy flexibility, prompting foreign investors to cut exposure to both equities and bonds," said Andrey Wijaya, head of research at RHB Sekuritas Indonesia.
Foreign investors have sold more than $3 billion worth of Indonesian stocks so far this year, as of Wednesday, compared to net selling of $1.03 billion for all of 2025, based on data from the Indonesian stock exchange website.
Confidence has been dented by a confluence of factors, including concerns over fiscal spending, equity market governance issues highlighted by an MSCI review, concerns around central bank autonomy, and shifting policy on commodity exports.
"While economic growth remains relatively resilient, concerns have emerged over fiscal discipline and rising government spending commitments," Wijaya said.
Data released on Tuesday showed Indonesia's trade surplus had shrunk to a six-year low in April and inflation in May moved toward the top of the target range, underscoring the country's exposure to the fallout from the Middle East conflict.
"The longer the uncertainty, the greater downside risks to growth and upside risks to inflation with increasingly idiosyncratic policy room to manoeuvre," Lavanya Venkateswaran, a senior ASEAN economist with OCBC, said.


PRESSURE REMAINS ON EM ASIA     
Asian assets continued to be under pressure as renewed fighting in the Middle East and elevated energy prices strain energy-dependent economies' current accounts and drive up inflation.
Stocks in Singapore .STI fell more than 1% from their record closing high clocked the previous day, with heavyweight banks, DBS DBSM.SI and OCBC OCBC.SI losing more than 1%.
Equities in the Philippines .PSI slipped 0.7%, while those in Malaysia .KLSE and Thailand .SETI advanced around 0.8%. 
Currencies were on the backfoot against a resilient U.S. dollar: the Malaysian ringgit MYR= depreciated to 4.014 per U.S. dollar, its weakest in two months. 
The South Korean won KRW=KFTC dipped 0.7% to its weakest level since late March, while the Singapore dollar SGD= and Taiwan dollar TWD=TP were largely unchanged.

      HIGHLIGHTS:    
** Indonesia's 1-year bond yield ID1YT=RR at 7.019%, 10-year at 6.709%
** Malaysia says no final U.S. tariff rate yet in forced labour probe 
** South Korea, China agree first expansion in flight rights in seven years
** Goldman Sachs lifts 12-month MSCI EM index forecast on AI-led gains

Asia stock indexes and currencies at 0427 GMT
COUNTRY
FX RIC
FX DAILY %
FX YTD %
INDEX
STOCKS DAILY %
STOCKS YTD %
Japan
JPY=
+0.04
-2.07
.N225
-1.55
33.78
China
CNY=CFXS
+0.03
+3.10
.SSEC
-0.43
2.46
India
INR=IN
+0.00
-6.10
.NSEI
-0.32
-10.71
Indonesia
IDR=
-0.55
-7.59
.JKSE
-3.92
-33.99
Malaysia
MYR=
-0.57
+1.07
.KLSE
0.82
0.38
Philippines
PHP=
+0.24
-4.48
.PSI
-0.81
-2.44
S.Korea
KRW=KFTC
-0.71
-5.90
.KS11
-1.14
106.47
Singapore
SGD=
+0.02
+0.18
.STI
-1.39
9.05
Taiwan
TWD=TP
-0.08
-0.09
.TWII
-0.97
58.84
Thailand
THB=TH
+0.11
-3.72
.SETI
0.90
27.21


Indonesian stock market's decline in 2026 https://reut.rs/4e23zkq
 (Reporting by Sneha Kumar in Bengaluru; additional reporting by Rae Wee in Singapore; Editing by Jacqueline Wong)
 ((Sneha.kumar@thomsonreuters.com))