The Indonesian financial markets took a sharp dive on Monday, September 8, 2025, following President Prabowo Subianto’s decision to remove Sri Mulyani Indrawati from her long-held position as Finance Minister, triggering widespread investor concern over the country’s fiscal trajectory.

The Jakarta Composite Index (IHSG) fell 100.49 points, or 1.28 percent, to close at 7,766 after spending much of the day in positive territory. The index had opened strongly and even climbed 0.58 percent during the first session to 7,912 before falling steeply in the final hour of trade.

The sudden cabinet reshuffle, which saw Sri Mulyani replaced by Purbaya Yudhi Sadewa, sent shockwaves through the equity market, particularly the banking sector, where major blue-chip stocks suffered sharp losses amid a foreign investor sell-off.

“This reshuffle, especially the removal of Sri Mulyani, has raised significant doubts about future fiscal discipline,” an analyst at Mirae Asset Sekuritas, M. Nafan Aji, spoke to Indonesia Business Post on Tuesday, September 9, 2025.

“Investors reacted quickly with broad-based selling,” he cited.

Foreign outflows

Foreign outflows dominated trading, with Bank Central Asia (BBCA) shedding 1.62 percent to Rp7,575 per share and recording a net foreign sell of Rp1.25 trillion on Monday alone. Year-to-date, foreign investors have sold Rp24.55 trillion worth of BBCA shares.

State-owned lenders also saw sharp declines. Bank Mandiri (BMRI) lost 1.78 percent to Rp4,410 with a net foreign sell of Rp347.21 billion, while Bank Negara Indonesia (BBNI) declined 2.15 percent to Rp4,090, as investors sold Rp 33.57 billion worth of shares. Year-to-date, Mandiri and BNI have seen foreign outflows of Rp13.41 trillion and Rp3.44 trillion respectively.

Bank Rakyat Indonesia (BBRI) fell 2.56 percent to Rp3,800 per share. Despite recording a net foreign buy of Rp 73.55 billion on the previous trading day, BBRI has still posted a net foreign sell of Rp629.96 billion for the year.

The market rout reflects broader investor fears that Prabowo's administration may loosen fiscal discipline and pressure the central bank to support expansionary policies.

“The removal of Indonesia’s well-respected Finance Minister Sri Mulyani from her post will raise concerns that, in the wake of recent protests in the country, President Prabowo Subianto will seek to loosen the fiscal rules,” Deputy Chief for Emerging Markets Economist at Capital Economics, Jason Tuvey, said as quoted by Reuters on Monday, September 8, 2025.

“At this stage, [Purbaya Yudhi Sadewa’s] views on economic policy are unclear, but the key risk is that he proves to be more pliant to the president’s wishes. There could even be pressure on the central bank to loosen monetary policy more aggressively,” Tuvey added.

The market downturn coincided with a broader cabinet shake-up. In addition to Sri Mulyani, ministers removed from their posts include Youth and Sports Minister Dito Ariotedjo, Cooperatives Minister Budi Arie Setiadi, Migrant Workers Protection Minister Abdul Kadir Karding, and Coordinating Minister for Political, Legal, and Security Affairs, Budi Gunawan.

By the close of trading on Monday, eight out of 11 sectoral indices on the Indonesia Stock Exchange were in the red, with consumer cyclicals logging the steepest drop at 2.48 percent. The total market capitalization stood at Rp14,085 trillion, with a daily transaction value of Rp 19.49 trillion and over 2.29 million trade frequencies.