In the wake of Indonesia’s worst stock-market rout since the 1998 Asian financial crisis, President Prabowo Subianto’s administration has turned to appeals to economic nationalism to shore up confidence, urging citizens to rally behind the country’s battered stock market.

The government has promised reforms in response to warnings from global index provider MSCI that Indonesia could be downgraded from emerging-market to stand-alone-market status.

But analysts say its patriotic appeals will do little to restore investor confidence without concrete steps to improve market transparency and governance, while potentially exposing retail investors to further losses.

After the Jakarta Composite Index (JCI) plunged 11 per cent on Friday, further sell-offs followed in the ensuing days, prompting a defiant Prabowo to address the market turmoil at a cabinet meeting five days later.

“MSCI wants to scare us, but I say to them: Indonesia fears no one and will not be intimidated!”

Prabowo also claimed Indonesia’s dispute with MSCI was among the “hurdles and obstructions” continuing to harry his administration. “But the nation has the strength, courage and willingness to make the necessary sacrifices.”The president’s defiance was accompanied by calls from senior figures in his administration and allies in the business community for Indonesians to support the domestic stock market.

Sufmi Dasco Ahmad, deputy speaker of the House of Representatives and a senior leader in the ruling Gerindra party, launched a Buy Indonesia campaign on Tuesday, urging citizens to buy domestic shares to prevent further declines.

“Through collective pan-Indonesia efforts, we can turn our bourse around. Buy Indonesia!”Dasco said on social media, reaffirming his confidence in the resilience of the local economy.

He was among the first officials to visit the Jakarta Stock Exchange on the day of the October 16 crash.

Mufti Nurlatifah, a lecturer in the Department of Communication Science at Yogyakarta’s University of Gadjah Mada, said while Dasco’s public appeal attempted to maintain optimism about Indonesia’s economic future, “it’s hardly enough without giving the public concrete reasons and measurable indicators why they should remain upbeat”.

She said it would be a grave error to conflate citizens’ patriotism with indiscriminate investment in Indonesian stocks.

Indonesian tycoon Jusuf Hamka, recently made one of Prabowo’s presidential advisers, also tried to support the market by announcing on Sunday that he was setting up a consortium to inject 5 trillion rupiah (US$277 million) into the bourse.

“Our blue chips can yield between 8 and 9 per cent annually, higher than term deposits,” he claimed.

Hamka described MSCI’s downgrade threat as a “shakedown” by a foreign force seeking to destabilise Indonesia, and urged local entrepreneurs to “step up and defend our sovereignty by buying up our domestic stocks”.

Bhima Yudhistira Adhinegara, executive director of Jakarta-based think tank the Centre of Economic and Law Studies, called the patriotic appeals made by Dasco and Hamka “dangerously misleading”.

“They could put retail investors in jeopardy as stock prices could tank further if and when institutional investors take a hike,” he said.

An MSCI downgrade could remove Indonesian stocks from global indexes tracking emerging markets, potentially prompting funds that follow those benchmarks to reduce their exposure to the country.

To calm market nerves, the Indonesia Stock Exchange met MSCI on Monday and outlined further measures to improve transparency, including identifying affiliated shareholders and excluding highly concentrated stocks from the JCI’s calculation. Authorities have also pledged broader capital-market reforms.

MSCI has said, however, that investors want evidence of the measures being consistently implemented and having a meaningful impact.

MSCI’s consultation on Indonesia’s proposed reclassification remains open until April 30, 2027, with a final decision expected by the end of June that year, giving the government time to demonstrate progress on the reforms.

Bhima argued that the central issue was how the Indonesian stock market was administered, rather than a lack of patriotic support for domestic shares.

“Instead of enacting the necessary reforms in the capital market, the government and its cohorts have opted for a narrative steeped in economic nationalism.”For Vedi Hadiz, a political sociologist at the University of Melbourne, the market turmoil also reflected tensions arising from Prabowo’s efforts to recentralise political and economic power.

These include the creation of Danantara, a sovereign wealth fund designed to consolidate management of state-owned enterprises, and plans to channel exports of key commodities such as coal and palm oil through a single state-owned company, giving the government greater control over the movement of resources and capital.

“His efforts to change the rules of the game to suit his own political and economic agenda will inevitably cause problems for established business groups who have to adapt to his agenda,” Hadiz said.

Dasco’s Buy Indonesia plea also exposed the tensions emerging from Prabowo’s bid to bring big businesses under tighter political control, Hadiz said. “But an appeal based on economic nationalism glosses over these tensions by suggesting that everyone shares the same interests.”Hadiz observed that patriotic appeals have featured in previous administrations’ responses to economic turmoil, often with limited results.

He cited former president Joko Widodo’s 2015 appeal to Indonesians to buy local products to counter rupiah depreciation.

In January 1998, amid the rupiah’s collapse, presidential daughter Siti Hardijanti Rukmana launched the Love the Rupiah Movement and tried to set an example by publicly selling US$50,000 of her own money.

Her initiative failed to arrest the currency’s slide, with the rupiah reaching almost 17,000 to the US dollar in June 1998, Bhima noted. “It happened because the appeal was made when the government had lost all public credibility and trust.”For investors, the concerns extend beyond the immediate MSCI dispute.

Ricky Ho, chief investment officer and portfolio manager at Jakarta-based family office Four Capital, said he remained “bearish on Indonesia”.

In his assessment, the Indonesian equity market faces a daunting combination of headwinds, including higher global discount rates, a stronger US dollar, expensive oil, weaker purchasing power among the middle class, continued pressure on banks’ asset quality, uncertain commodity margins and the unresolved MSCI issue. “That is simply not the environment in which I’d want to take large risks,” Ho said.

For Hadiz, however, the stock-market turmoil did not in itself demonstrate that big businesses were resisting Prabowo’s economic agenda, often referred to as Prabowonomics.

“Resistance can take the form of lobbying, holding back investment, demanding concessions or pushing for changes in policy.”The upheaval nevertheless presents a dilemma for the president.

“Prabowo wants to exercise greater control over the conglomerates, yet still needs their investment and cooperation to make his economic and political agenda work,” Hadiz said.