(Bloomberg) -- At the market open in Jakarta, it looked bad — but the kind of losses that wouldn’t raise traders’ eyebrows given the volatile nature of Indonesian stocks.

Then it got worse. Selling intensified into the late morning Tuesday, pushing Indonesia’s benchmark Jakarta Composite Index down by as much as 7.1%, the steepest intraday decline since 2011.

Circuit breakers triggered trading halts in Jakarta on a day when the rest of Asian equity markets rallied. Traders said the selloff wasn’t driven by any single catalyst, but rather a combination of factors including concerns over President Prabowo Subianto’s populist measures, forced liquidations and uncertainties over the finance ministry’s leadership.

“Foreign investors are clearly rattled by Prabowo’s troubling signals on budget reallocation and the Finance Ministry’s ability to maintain the overall fiscal discipline,” said Homin Lee, a senior macro strategist at Lombard Odier Ltd. in Singapore. “The recent weakening of the government revenue collection and the resulting early deficit appear to be reviving the market’s worry about the future in the cabinet.”

The stock selloff triggered a 30-minute temporary suspension after losses in the benchmark index exceeded 5% for the first time since 2020. As shares slumped, the 30-day volatility for the JCI climbed to the highest level since the Covid era in May 2020.

Factoring in Tuesday’s plunge, the nation’s stock market has tumbled 12% this year, the second-worst major equity index in the world after Thailand. Overseas investors have sold a net $1.6 billion of the nation’s shares this quarter, more than erasing all of last year’s inflows.

While Southeast Asia markets as a whole have declined since US President Donald Trump’s election in November bolstered the dollar, what makes international investors worry most about Indonesia, the region’s largest economy, is the largely unanticipated accumulation of power by Prabowo.

The new president has sought to divert funds into his priority projects, while cutting back on expenditure elsewhere, rattling investor confidence. As an example, the newly launched sovereign wealth fund Danantara — which has a direct reporting line to the president — said last month it would take over management of seven state-owned enterprises. Indonesia posted an unlikely budget deficit for February due to a more than 20% slide in state revenues, adding to concerns about the health of government finances.

Also sapping investor confidence Tuesday was speculation that widely-respected Finance Minister Sri Mulyani Indrawati had decided to resign. The government sought to counter those concerns with Parliament Deputy Speaker Sufmi Dasco Ahmad saying Sri Mulyani wasn’t stepping down.

“I reiterate that I am here, I am standing here, and I am not stepping down,” Indrawati said later at a briefing. “I remain focused on carrying out the president’s duties and trust to manage state finances professionally.”

The quashing of the speculation and the authorities’ efforts to bolster the rupiah helped stem the stock selloff, and enabled the benchmark JCI index to close the day down by a comparatively modest 3.8%. The rupiah also pared its declines on the day, but it has still dropped about 2% this year, Asia’s worst-performing currency.

‘Lot of Negatives’

“The selloff has been a bolt from the blue in many ways — the suddenness has caught the market by surprise,” said Nirgunan Tiruchelvam, an analyst at Aletheia Capital in Singapore. “Prabowo’s anti-business measures could have escalated this situation, but now it seems like it was already loaded with a lot of negatives.”

Investors are now looking ahead to a central bank monetary policy meeting Wednesday, where policy makers may unveil measures to further stabilize the nation’s financial markets and boost growth.

“Markets hate uncertainty, but they do like direction — now it’s up to policymakers to set the tone,” said Mohit Mirpuri, a fund manager at SGMC Capital Pte in Singapore.

--With assistance from Claire Jiao, John Cheng, Matthew Burgess, Abhishek Vishnoi and Cecile Vannucci.