A selling spree will likely continue this week as worries over the country'€™s weakening economy and the possibility that the US Federal Reserve will raise its interest rates earlier than expected promote further negative market sentiments.

According to Indonesia Stock Exchange

(IDX) data, foreign investors sold shares worth about
Rp 91 trillion (US$6.8 billion) during the past six weeks, or since April 27, when the market'€™s main price index crashed and lost about 3.5 percent.

The panic selling during the six weeks caused foreign net sales of nearly Rp 12 trillion and left year-to-date net purchases at Rp 6.05 trillion, or one-third of its previous standing of around Rp 18 trillion.

The massive outflow came after Indonesia'€™s stock market

index hit its highest record levels several times during the year because of the sharp increase in foreign purchases, which analysts said was due to high expectations about President Joko '€œJokowi'€ Widodo'€™s government, rather than the actual economic conditions.

Investors, however, took a different course after they witnessed the poor performance of the country'€™s economy, which slowed to 4.7 percent in the first quarter, the lowest level in six years.

The high inflation rate and the rupiah'€™s sharp depreciation against the US dollar, as well as the poor progress in government spending and infrastructure programs have added to their concerns.

Valbury Capital Management investment director Andreas Yasakasih said that investors mostly decided to pull out from the local stock market

following the announcement of the country'€™s lower than expected economic growth in the first quarter.

'€œTheoretically, if a country sees slowing growth two times in a row, it is going down into an economic crisis,'€ Andreas said. Indonesia'€™s economy grew 5.01 percent in 2014, the slowest rate of expansion for five years. The figure was lower than the 5.78 percent in 2013.

David Sutyanto from First Asia Capital said that no significant improvement was expected to be seen in the short term, especially after inflation surged to 7.15 percent in May, the highest this year, and sparked concerns that Bank Indonesia (BI) would maintain its tight monetary policy.

The high inflation came before the festive season of Ramadhan and the Islamic holiday of Idul Fitri, which will last from mid-June to mid-July, during which prices are up on high demand.

Business players and stock market

analysts have called on the central bank to lower the so-called BI rate '€” currently at 7.5 percent '€” in order to spur the economy.

'€œGiven our weak economic growth and threatening inflation, foreign net sells will continue to happen unless the government precipitates their spending as investors need proof that Jokowi is doing something to improve this condition,'€ David said.

Another factor that makes the capital outflows seem unbreakable, according to Andreas, stems from speculation over when the Fed will raise its funds rate, further leading to investors to pull their investments from emerging markets.

A US Labor Department report out on Friday showed US payrolls jumped in May by the most in five months, further strengthening signals that the Fed will raise its benchmark interest rate later this year.

'€œInvestors will think twice to enter the stock market

ahead of a possible hike in the Fed'€™s rate. I believe, however, the increase in the Fed'€™s rate will only cause a temporary impact and investors will come back in the third quarter after infrastructure projects start,'€ Andreas said.

The benchmark Jakarta Composite Index (JCI) has lost around 6 percent of its value since April 24 as it ended at 5,100 on Friday. The JCI slumped by 2.42 percent year-to-date, now the worst performer among mixed South East Asia indexes.

The rupiah, meanwhile, slipped to as low as 13,295 versus the dollar, its weakest level since August 1998, according to Thomson Reuters data.