(Bloomberg) -- Foreign investors are growing wary of Indonesian stocks, with equity outflows reaching the 15th straight session, as a stronger dollar dented the appeal of emerging-market assets.
The selling matched the previous two such streaks this year, and led to $891 million of outflows so far in November, according to data compiled by Bloomberg. That contributed to the nation’s benchmark equity index sliding to the brink of a correction, dipping about 9% from a record high on Sept. 19.
A resurgent dollar and higher treasury yields have wreaked havoc on emerging-market assets in recent weeks on concerns President-elect Donald Trump’s policies will lift US inflation and force the Federal Reserve to temper its rate cuts. The rupiah declined 1% this month on outflows.
“What was initially a major tailwind for Asean, such as the lower US dollar on lower rates and inflation, in the few months ahead of the US election has reversed into a headwind,” said Niklas Olausson, head of research at Valverde Investment Partners Pte.
Foreign investors have also sold a net $810 million of Indonesian government bonds this month, putting it on track for its first monthly outflow since April, according to Finance Ministry data.
“Indonesia lacks fresh catalysts at the macro level” for now, “so it’s not surprising that investors are adjusting their portfolios,” said Olausson. The new government needs time to implement proposals and come up with new policies to reverse outflows, he said.
READ: Indonesia Sees Less Room for Easing, Will Act to Support Rupiah
--With assistance from Prima Wirayani.
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