(Bloomberg) -- Indonesian stocks extended a slump and the rupiah weakened as the government started transferring key state firms’ ownership to a new sovereign wealth fund, fueling concerns about increasingly centralized economic decision making.

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The benchmark Jakarta Composite Index fell as much as 4.7%, the biggest one-day slide in nearly a week. The rupiah lost 0.4% against the dollar, putting the currency closer to its weakest level since 1998. The stock index has since narrowed its loss to 2.3%.

The selloff came as the government started a previously announced ownership shift in several top state companies, such as telecommunications firm PT Telkom Indonesia and steelmaker PT Krakatau Steel, to the new sovereign wealth fund Danantara. The Southeast Asian country’s financial markets have been under pressure in recent weeks as concerns grow that President Prabowo Subianto’s populist agenda and firmer grip on power may strain government finances, sap growth and worsen the investment climate.

“Investors are generally feeling uncertain about where the economic policies are heading toward under President Prabowo,” said Kok Hoong Wong, head of institutional equities sales trading at Maybank Securities. The transfer of state firms’ ownership “seemed to have continued to unsettle investors.”

Danantara is set to unveil its management lineup on Monday, an event that also grabs investors’ attention.

Monday’s selloff was reminiscent of the rout on March 18, when the benchmark stock index fell as much as 7.1%, the steepest intraday decline since 2011. It breached the 5% threshold that day and triggered circuit breakers that halted trading for 30 minutes. Down nearly 14% this year, the index remains one of the world’s worst performers.

The upcoming long public holiday means trading will likely be thin later this week, said Mohit Mirpuri, a fund manager at SGMC Capital Pte in Singapore. “That makes today and tomorrow the most active sessions of the week.”

Indonesia’s financial markets will be shut from March 28 through April 7.

The selling also spread to the country’s government bonds, with yields on the benchmark 10-year notes up 4 basis points. That pushed the risk premium investors demand to hold Indonesia’s 10-year debt over its US counterpart to the highest since September.

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Meanwhile, global funds sold a net $142.3 million of Indonesian equities on March 21, the seventh straight session of outflows, according to Bloomberg data. Foreign investors have withdrawn more than $2 billion so far this year.

A series of moves by President Prabowo in recent months, including the launch of the new sovereign wealth fund that directly reports to him, marked an unprecedented accumulation of power that has triggered concerns about political influence and transparency. Meanwhile, a proposal to further expand the central bank’s mandate also has raised questions over its independence as Prabowo looks to ramp up growth.

--With assistance from Abhishek Vishnoi, John Cheng and Matthew Burgess.

(Updates with details on rupiah and bonds, as well as more details)

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