Sri Mulyani’s Reshuffle: Will Foreign Capital Flee the Indonesian Stock Market?

Flooring Guide by Cinvex – JAKARTA – Indonesia’s stock market is bracing for a potentially intensified foreign capital outflow, driven by a growing perception of financial risk. This heightened financial risk perception is clearly reflected in the recent surge in the country’s credit default swap (CDS) rates and an uptick in government bond yields (SUN).

According to Bloomberg data on Tuesday (9/9) at 11:00 AM Western Indonesia Time (WIB), Indonesia’s 5-year CDS rose to 72.52 basis points from 67.72 basis points recorded in the previous day’s trading. Concurrently, the benchmark 10-year government bond yield climbed to 6.45%, up from yesterday’s range of 6.39%.

Reydi Octa, an Indonesian Capital Market Observer, views this surge in the nation’s financial risk perception as a direct market response to the recent cabinet reshuffle, which saw Sri Mulyani removed from her position as Minister of Finance.

“The jump in credit default swap rates and government bond yields signals that Indonesia is now perceived as riskier than it was before Sri Mulyani’s replacement,” Reydi told Bisnis on Tuesday (9/9/2025). He added, “Intense competition among emerging markets is prompting foreign investors to shift their focus towards countries with more robust fiscal stability.”

This sentiment underscores a critical development: Sri Mulyani Reshuffle Adds Pressure to Foreign Holdings in Banking Issuers (BBCA, BMRI, BBRI).

The immediate impact was palpable: on Monday (8/9/2025), coinciding with the cabinet reshuffle announcement, Indonesia’s Composite Stock Price Index (IHSG) tumbled 1.28% to 7,766.84. This sharp decline was accompanied by a foreign net sell of Rp526.17 billion. This outflow of foreign capital pushed the year-to-date foreign net sell total to a staggering Rp55.65 trillion.

In stark contrast, other emerging market stock exchanges recorded gains during the same period. For instance, the FTSE Bursa Malaysia KLCI Index rose by 0.47% to 1,585.59, while Thailand’s SET Index saw a 0.10% increase, reaching 1,266.11.

“Indonesia risks losing the foreign investor confidence painstakingly built upon its fiscal credibility,” Reydi emphasized.

He believes that this pressure from diminishing foreign capital flows could persist for an unpredictable duration, with banking stocks likely to become the primary casualties in this unfolding scenario.

“As foreign capital continues to exit, liquidity will shrink, leading to stock corrections and lower valuations than before,” he concluded, adding that “interest-rate sensitive sectors will be most severely impacted.”

Indeed, the Indonesia Stock Exchange (BEI) reported that during Monday’s (8/9/2025) trading close, four out of the five top laggards in the composite index were banking stocks. BBCA led this list, shedding 3.75%. It was followed by BMRI, which corrected by 4.06% at second place, and BBRI, which dropped 2.50% to take the third spot. BBNI also saw a significant reduction of 4.35%, placing it fifth.

The correction in these banking stocks was directly accompanied by aggressive foreign selling. BBCA recorded a staggering net sell of Rp1.25 trillion, bringing its year-to-date foreign net sell to Rp24.55 trillion.

Meanwhile, BMRI experienced a foreign net sell of Rp347.21 billion, pushing its total foreign net sell since the beginning of the year to Rp13.41 trillion. BBNI also registered a foreign net sell of Rp33.57 billion for the day, contributing to a year-to-date foreign net sell of Rp3.44 trillion.

Interestingly, BBRI still saw a foreign net buy of Rp73.55 billion on that single trading day. However, its year-to-date performance for this state-owned bank issuer shows a substantial foreign net sell of Rp629.96 billion.

Disclaimer: This news article is not intended as an invitation to buy or sell stocks. Investment decisions rest entirely with the reader. Bisnis.com is not responsible for any losses or gains arising from the reader’s investment decisions.