Jakarta Stocks Plunge Over 11% Intraday as MSCI Opens Consultation on Downgrading Indonesia to Standalone Market
JAKARTA — Index provider MSCI announced on Oct. 15 that it has launched a consultation on a proposal to reclassify Indonesia from an emerging market to a standalone market. On Friday, Oct. 16, Jakarta's benchmark Composite Index plunged 8% at the open, triggering a circuit breaker that halted trading for 30 minutes; losses deepened after trading resumed. According to Reuters, as of 9:33 a.m. Jakarta time the index was down 11.21%, its steepest one-day drop since January 1998, with the index at its lowest level since 2020. The index has now fallen about 39.79% this year, making it the worst-performing market in Asia. The rupiah weakened to around 18,070 per U.S. dollar, its lowest since early August and close to its lifetime low of 18,190.
In its statement, MSCI said market participants had indicated that, to date, sufficient progress has not been observed consistently across the Indonesian equity market, and that significant concerns remain around market dysfunction, including continued suspected coordinated trading behavior and a lack of evidence of meaningful enforcement. MSCI said Indonesia's continued classification as an emerging market is no longer appropriate, and that even a reclassification to frontier market status would not properly recognize the depth of the market's problems. If implemented, Indonesian stocks would be removed from major benchmarks such as the MSCI Emerging Markets Index, forcing passive funds that track those indexes to sell their Indonesian holdings. Indonesia would also become the first Asia-Pacific economy classified as a standalone market; current standalone markets include Argentina, Lebanon and Palestine, with none in Asia.
On timing, MSCI's consultation accepts feedback through April 30, 2027, and a final decision will be announced by June 30, 2027. In January this year, MSCI had already frozen positive index adjustments for Indonesian stocks and warned the country could be downgraded to frontier market status.
Jeffrey Hendrik, president director of the Indonesia Stock Exchange (IDX), said in a written statement on Friday that the exchange and the Financial Services Authority (OJK) had taken various concrete steps to improve the transparency, integrity and quality of Indonesia's capital market, and that the reform efforts had received positive responses from global investors and international index providers. Given the reforms implemented, the exchange will seek further clarification from MSCI on the rationale and assessments underlying the announcement, he said. The statement added that the IDX respects MSCI's independence in making assessments under its own methodology, emphasized that the announcement remains a consultation rather than a final decision, and said the exchange will continue coordinating with the OJK and other stakeholders to ensure trading remains orderly, fair and efficient. According to Reuters, the OJK and Indonesia's finance ministry did not immediately respond to requests for comment, and no public intervention statement from Bank Indonesia was reported.
Friday's selloff extends a year of turmoil for Indonesian equities. After MSCI froze positive index adjustments and issued its downgrade warning on Jan. 28, Jakarta stocks tumbled over two sessions, wiping out roughly $80 billion in market value, and the head of the stock exchange and two top OJK officials resigned within days. Authorities then rolled out reforms, including disclosure requirements for shareholders holding more than 1% and a roadmap to raise the minimum free float for listed companies from 7.5% to 15%, announcing in April that the reforms were complete. In June, MSCI lowered Indonesia's information-flow criterion to negative. According to MSCI's consultation document, the total market capitalization of the MSCI Indonesia Index has fallen about 55% since the start of 2026, and its weight in the MSCI Emerging Markets Index has dropped from 1.16% to 0.43%. Foreign investors have continued to pull out of Indonesian stocks, with net selling of about $3.9 billion in the first half of the year, while Moody's and Fitch have both revised Indonesia's sovereign credit outlook to negative.
Jakarta's market had not yet closed at the time of publication (the closing session ends at 3:30 p.m. Jakarta time); the figures above are intraday, and GSM will follow up with the closing results.
Source: GSM · USA (original Chinese edition)
Photo: 图：位于雅加达苏迪曼中央商务区的印尼证券交易所（IDX）大楼。图片来源：印尼证券交易所（Bursa Efek Indonesia），经维基共享资源（Wikimedia Commons）发布。The Indonesia Stock Exchange (IDX) building in Jakarta's Sudirman Central Business District. Photo: Bursa Efek Indonesia, via Wikimedia Commons.
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