KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Key Takeaway: Indonesia’s markets came under pressure after respected finance minister Sri Mulyani Indrawati was removed, fueling investor concerns over policy direction under President Prabowo Subianto amid recent political unrest.
Market Reaction
The rupiah fell 1.1% to 16,482 per dollar on Tuesday, while the Jakarta Composite Index dropped 1.3%. Sovereign bonds also weakened. Bank Indonesia (BI) confirmed it was intervening in the currency and bond markets to stabilise the rupiah.
Year-to-date, the rupiah has slid 2.3%, making it Asia’s worst-performing currency after the Indian rupee. By contrast, the Jakarta Composite is still up 9.1% in 2025, though it lags other Asian emerging-market peers.
Political Shift
Indrawati’s removal comes just days after Indonesia experienced its worst anti-government protests in years, raising fears of more populist fiscal measures. She had been widely respected among global investors for her fiscal discipline.
Her replacement, Purbaya Yudhi Sadewa, pledged to maintain fiscal health, but concerns linger over reduced policy independence.
“This is not entirely what we like,” said Carl Vermassen of Vontobel Asset Management, noting creeping signs of weaker central-bank independence. “It’s the sort of events that would motivate reducing risk.”
Investor Sentiment
Concerns over Indrawati’s potential resignation had already shaken markets earlier this month. Overseas investors sold about US$845 million (RM3.55 billion) of Indonesian stocks and bonds in September, Bloomberg data showed.
Tareck Horchani of Maybank Securities said local support flows helped cushion the immediate shock, but sentiment could stay fragile in the near term.
Policy Outlook
Bloomberg Economics warned the move “risks spooking investors just when trust is most needed,” particularly as the government and central bank pursue a burden-sharing arrangement that partially monetises state spending.
Bank Indonesia executive director Erwin Hutapea said the central bank is stabilising the rupiah via interventions in both onshore and offshore FX markets and through purchases of government bonds.
Citigroup economist Helmi Arman expects BI to prioritise FX stability in the near term and sees little chance of a rate cut this month, warning that heightened uncertainty could drive further foreign portfolio outflows.
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