Indonesia Stocks Sink on MSCI Downgrade Warning
MSCI said the downgrade could force funds to sell Indonesian stocks, with UBS estimating $4 billion in passive outflows and up to $15 billion more from active investors.
- On Friday, MSCI announced plans to remove Indonesia from "emerging market" status, triggering an 11.57% plunge in the Jakarta Composite Index , its largest single-day drop since January 1998.
- MSCI cited "significant concerns" around market dysfunction and insufficient reforms to tackle opacity in ownership, proposing a downgrade to "standalone" status instead of frontier classification.
- Friday's sell-off wiped out about $60 billion, bringing total losses to more than $350 billion since the January freeze; UBS estimated the move could trigger about $4 billion in passive outflows and $15 billion in active outflows.
- Indonesian senior economic minister Airlangga Hartarto questioned why MSCI did not discuss the downgrade in Bangkok, while analyst Angus Mackintosh argued that "grouping Indonesia with Lebanon, Palestine, and Argentina does not make sense."
- MSCI will run a consultation with market participants until April 2027 and proceed with reclassification by mid-2027 unless it finds clear evidence of improvement in market governance and function.
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12 Articles
Indonesia stocks sink on MSCI downgrade warning
Indonesian stocks yesterday suffered their worst rout in nearly three decades after MSCI Inc warned the country’s emerging-market status was in jeopardy, raising the prospect of its removal from global indices and stoking fears of foreign capital flight.The benchmark Jakarta Composite Index tumbled
The Jakarta Composite Index (JCI) weakened throughout today's trading, closing down 11.57% at 5,185.1.
Jakarta shares plunge after downgrade shock
JAKARTA — Indonesia’s stock market is no longer worthy of “emerging market” status, MSCI said on Friday, laying out a plan to remove it from a series of indexes tracked by investment funds, a shock move that sparked the steepest one-day drop in Jakarta shares since 1998.
Indonesia stocks crash 11% in worst rout since 1998. Why is MSCI threatening to shut it out of global indexes?
Indonesia's stock market crashed 11 percent in its worst rout since 1998 after MSCI proposed stripping the country of emerging-market status and excluding it from major global indexes. Here's why investors are alarmed.
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