Indonesian stocks post worst day since 1998 after MSCI warning
publishers 15articles 16first reported 16 Oct, 03:43 UTCdeveloping since 16 Oct · 11 editions
Indonesian stocks plunged on Friday after MSCI said the country’s continued classification as an emerging market was no longer appropriate and proposed removing it from widely followed global indexes.
The Jakarta Composite Index closed down 11.6%, its steepest one-day fall since January 1998, after a selloff that triggered a 30-minute trading halt. About $60 billion in market value was erased, while the rupiah weakened as much as 0.8% to 18,070 per dollar before recovering some ground. Indonesian equities have lost more than $350 billion in market capitalization since MSCI froze index changes in January.
MSCI said concerns remained over opaque ownership structures, suspected coordinated trading and weak enforcement. It began a consultation on moving Indonesia past “frontier” classification to “standalone” status, which would exclude its shares from global indexes tracked by passive funds. A final decision is expected in June 2027 unless MSCI sees clear evidence of material improvements in market governance.
UBS estimated the change could cause about $4 billion in passive outflows and as much as $15 billion in additional active-investor outflows. Mirae Asset Sekuritas Indonesia estimated passive outflows at about $3 billion.
Indonesian officials questioned the decision, while the Indonesia Stock Exchange said it would seek clarification and pointed to reforms intended to improve transparency and market integrity. The financial regulator said it was reviewing MSCI’s assessment and announced sanctions related to alleged manipulation in shares of three companies.
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Written from 8 articles, 2 with the publisher's own text; 8 independent newsrooms once syndicated copies count as one; this version written 18 h after the record first saw the story; the editor kept it as written.
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- This version written
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