MSCI Downgrade Warning Shakes Indonesian Stocks as Regulators Respond
Index provider MSCI's proposal to reclassify Indonesia's capital market from emerging market to standalone status has shaken Jakarta stocks. Reuters reported that the announcement wiped about $65 billion off the value of Indonesian equities, with the Jakarta Composite Index falling 11.6 percent — its biggest one-day drop since the Asian financial crisis in 1998 — while the rupiah fell as much as 0.8 percent.
Indonesia's Financial Services Authority (OJK) and the Indonesia Stock Exchange (IDX) responded on October 17. MSCI had previously raised concerns over opaque ownership and securities trading practices and had floated a less severe downgrade; the new proposal goes further than markets had braced for.
"The proposal goes well beyond what we had considered our worst-case scenario," said Rully Arya Wisnubroto, head of research at Mirae Asset Sekuritas in Jakarta. Analysts say removal from major global benchmarks could cut Indonesia off from billions of dollars in foreign investment, and attention has turned to the central bank's rate decision on Tuesday. (GSM, based on Reuters reporting)
Source: GSM · USA (original Chinese edition)
Photo: 雅加达国家纪念塔。The national monument (monas), jakarta. Photo by Indies1, Wikimedia Commons, CC BY 4.0.
