Foreign investors are dumping Indonesia's stocks, bonds and currency in one of the largest asset liquidations in decades, driven by concerns over President Prabowo Subianto's interventionist policies. Net stock sales reached $3.9bn this year - the biggest outflow since 1996 - while the benchmark stock index has collapsed 32 per cent, making it the world's worst-performing equity market.

The rupiah sits slightly above historic lows against the dollar, with a 7.3 per cent decline ranking among Asia's worst currencies. Foreign holdings of government securities have dropped to 12.5 per cent - their lowest since 2009. Bank Indonesia's forex reserves fell to a near two-year low of $144.9bn as the central bank defends the currency.

Prabowo's $15bn free school meal scheme faces corruption allegations and implementation criticism, raising doubts about the government's execution capabilities. His dismissal of respected finance minister Sri Mulyani and appointment of his nephew to the central bank board have alarmed markets about institutional independence.

Index provider MSCI may downgrade Indonesia to frontier market status amid concerns over market concentration and transparency. Rating agencies have already cut outlooks on policy uncertainty. Bank Indonesia's off-cycle rate hike this week temporarily steadied markets, but investors remain cautious, waiting to see if the administration can rebuild institutional credibility and fiscal discipline.