Jakarta. Jakarta Composite Index (JCI) tumbled 4.11%, or 254 points, to 5,941 on Wednesday, its lowest level this year, after Moody’s assigned a negative outlook to Danantara Investment Management (DIM), while the rupiah weakened beyond Rp 17,900 per US dollar to a record low.

The benchmark index traded between 5,841 and 6,213 during the session. Market activity remained heavy, with volume reaching 39.9 billion shares, turnover totaling Rp 25.2 trillion ($1.4 billion), and more than 2.7 million transactions recorded. Decliners overwhelmed gainers, with 692 stocks falling, 69 advancing, and 54 unchanged.

According to Pilarmas Investindo Sekuritas, the sharp decline was driven by a combination of domestic and global factors that fueled a broad risk-off sentiment among investors.

The sell-off followed Moody’s Ratings' decision to assign a Baa2 issuer rating to Danantara Investment Management. The agency also granted a Baa2 rating to DIM’s senior unsecured Global Medium-Term Note (MTN) program and proposed senior unsecured debt securities.

Moody’s assigned a provisional (P)Baa2 rating to Danantara Investment Management’s senior unsecured global MTN program and a Baa2 rating to the entity’s proposed senior unsecured notes. The MTN program allows securities to be issued by DIM or jointly with its issuing subsidiaries.

Moody’s said the Baa2 issuer rating reflects Indonesia’s sovereign credit rating, which carries the same rating level.

However, the rating agency did not assign a Baseline Credit Assessment (BCA) to DIM, citing the institution’s limited operating history and lack of an established standalone track record.

As a result, Moody’s said DIM’s Baa2 rating with a negative outlook is largely driven by its links to the Indonesian government rather than its own independent credit strength.

DIM was established under Law No. 16/2025 as part of the Danantara institutional structure and operates as a subsidiary of Danantara, which oversees and optimizes state-owned enterprise assets and investments.

Moody’s said DIM’s ownership ties to Danantara are strengthened by a legal framework that requires legislative amendments for any divestment, underscoring the long-term nature of the relationship.

Pilarmas said pressure on the market was compounded by the rupiah’s continued weakness, with the currency falling beyond Rp 17,900 per US dollar despite May inflation remaining within Bank Indonesia’s target range and Indonesia posting a trade surplus in April.

"However, rising monthly inflation and a narrowing trade surplus are seen as weighing on purchasing power and external resilience," Pilarmas said.

Externally, investors were also monitoring rising geopolitical tensions in the Middle East. Pilarmas noted that stalled US-Iran peace negotiations had reignited concerns after reports of military escalation, including ballistic missile launches and retaliatory responses.

"The situation has increased concerns over regional stability and the potential disruption of global energy supplies," the brokerage said.

Across Asia, Japan’s Nikkei 225 gained 2.5% to 68,402. Hong Kong’s Hang Seng Index fell 1.6% to 25,633, while China’s Shanghai Composite rose 0.2% to 4,083. South Korean markets were closed for a public holiday.

On Wall Street overnight, the S&P 500 rose 0.1% to 7,609.78 after fluctuating between modest gains and losses. The Dow Jones Industrial Average added 0.4% to 51,307.79, while the Nasdaq Composite edged up less than 0.1% to 27,093.90. All three indices finished at record highs.