(Bloomberg) -- Global funds are poised to continue selling Indonesian stocks after the central bank’s surprise interest-rate hike had minimal impact in boosting the nation’s currency. 

Overseas investors withdrew over $1 billion from Indonesian equities in April, according to data released by the Indonesian Stock Exchange, ending a four-month streak of inflows. Net selling continued into May, with investors favoring other markets. 

“We have been adding more to China recently and, I think from a flow point of view, we could see some money coming out of Indonesia,” Sat Duhra, a fund manager at Janus Henderson Group Plc, said in a phone interview. “China right now has a lot of momentum and people are getting more comfortable with the fact that we may not see another property bond default.”

Bank Indonesia defied expectations and raised its benchmark interest rate to a record high to help guide the rupiah below the psychological level of 16,000 against the dollar by year-end. The rupiah has been trading near a four-year low, partly due to a broad dollar rebound and dividend repatriation. It was among the hardest-hit currencies in Asia in April.

Every percentage point of rupiah depreciation against the greenback will squeeze the earnings-per-share growth of Jakarta Composite Index companies by a similar amount, said Mark Matthews, the Singapore-based head of Asia research at Bank Julius Baer & Co. Therefore, if BI’s move helped the rupiah, equity investors should also benefit.

“So far the surprise hike hasn’t been helping the rupiah to stabilize, as Fed uncertainty and the Middle East tension feed into the bias toward safe-haven dollar,” said Bloomberg Intelligence analyst Sufianti Sufianti. “That could keep sentiment over Indonesia’s equity market muted.”

--With assistance from Lee Miller.

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