Reports have emerged that global investors are withdrawing funds from the Southeast Asian market and turning their attention to Chinese stocks, causing significant damage to the stock markets in Indonesia and Thailand.
According to the Financial Times (FT) on the 22nd (local time), the Indonesian stock market has fallen to its lowest level in four years this year, and the rupiah exchange rate has hit its lowest level in five years. The MSCI Indonesia Index has declined by about 16% in U.S. dollar terms compared to the beginning of the year, while the Thai index has also dropped more than 12% during the same period.
According to the International Institute of Finance (IIF), foreign investors have withdrawn approximately $1.3 billion (about 1.9 trillion won) from Indonesia and about $500 million (roughly 730 billion won) from Thailand this year.
In Indonesia, concerns over a slowdown in economic growth and political risks have dragged down the stock market. In recent years, Indonesia's economic growth rate had been around 5%, making it an attractive market, but since the inauguration of President Prabowo Subianto in October of last year, growth has faced significant obstacles.
This is due to the promise of free meals for students and pregnant women costing $28 billion (about 41 trillion won) annually, as well as the establishment of a sovereign wealth fund "Danantara," which has raised fiscal concerns. Bloomberg predicts that Indonesia's government budget for this year will surpass its gross domestic product (GDP), leading to a budget deficit for the first time in four years since 2021.
Thailand, which has the second-largest economy in Southeast Asia after Indonesia, currently records the highest level of household debt in Asia. Thailand's household debt amounts to 90% of GDP, leading to stagnation in private consumption and investment. The heavy dependence on U.S. exports amid the U.S.-China trade war also poses a risk. Bank of America has analyzed that a 10% tariff on Thai exports to the U.S. could reduce GDP by 0.2% to 0.3%.
They noted to FT that "Thailand's economic outlook remains difficult due to a manufacturing slump, a downturn in tourism, and decreased domestic demand," adding, "Structural reform is urgent. Without proactive investment and reform, Thailand risks falling into a low-growth trap."
In contrast, the Chinese stock market saw an influx of $13 billion (about 19 trillion won) during the same period. Investment flowed into China, fueled by the strong performance of technology companies in the artificial intelligence (AI) sector, such as DeepSeek. FT reported that "Chinese stocks were evaluated as the best-performing assets in the first quarter of this year."