Indonesian stocks plunged 5 percent on Thursday, prompting an automatic pause in trading, and the central bank intervened to steady the rupiah after the authorities reimposed restrictions in the capital Jakarta to stem rising COVID-19 cases.
The fall in Jakarta was the biggest since March and came in contrast to most other emerging markets in Asia, which were back in positive territory after a halt in the slide in US stocks overnight. Seoul shares were up 0.9 percent.
Markets in Southeast Asia’s most populous state have been struggling for two weeks due to concerns over the outbreak, growth and government moves to use the central bank to help with bond market funding.
The rupiah has retreated around 1.5 percent since a parliamentary panel at the end of August recommended sweeping changes to Bank Indonesia’s institutional setup that would give ministers more say.
“This is an unexpected turn of events,” Trimegah Securities said of the restrictions in a note, saying the downside on the stock index could be limited to around 10 percent as companies are likely better prepared after the first lockdown.