Indonesia Stocks Drop to 4-Week Low After FM Replacement

The IDX Composite fell 110 points, or 1.4%, to 7,657 in morning trade on Tuesday, retreating for the third straight session and hitting its lowest level in four weeks. The decline followed the government’s replacement of Finance Minister (FM) Sri Mulyani in a cabinet reshuffle on Monday. Purbaya Y. Sadewa, an economist and Chairman of the Deposit Insurance Corporation, was appointed as the new FM. Investors fear that populist spending plans under President Prabowo Subianto could erode hard-fought fiscal credibility. On Monday, Purbaya vowed to accelerate growth, telling reporters the president’s target of 8% economic growth was “not impossible.” However, an upbeat session on Wall Street overnight capped the fall, amid hopes of Fed interest rate cuts following a disappointing August jobs report. All sectors traded in the red, led by finance and primary consumers, with the biggest laggards including Gudang Garam (-9.0%), BRI (-3.1%), BNI (-3.1%), BCA (-2.6%), and Bank Mandiri (-2.2%).