MSCI gets set to remove Indonesia from global indexes, sparks market slide to six-year low
MSCI cited market dysfunction and weak enforcement, warning a standalone reclassification could force funds to sell Indonesian holdings and accelerate outflows.
- On October 16, 2026, MSCI, the global index provider, launched a consultation proposing to reclassify Indonesia from emerging-market to standalone status, with a final decision expected by June 30, 2027.
- MSCI cited persistent concerns regarding ownership opacity and suspected coordinated trading behavior, noting that previous regulatory reforms had failed to demonstrate sufficient material improvement in market governance.
- The announcement triggered an 11.6% single-day plunge in the Jakarta Composite Index on October 16, 2026; Indonesia Stock Exchange officials halved the lower auto-rejection limit to 7% to curb volatility.
- Goldman Sachs estimates a full reclassification could trigger approximately $5.6 billion in passive fund outflows, while foreign investors have already withdrawn $4.88 billion worth of Indonesian stocks this year.
- Indonesian authorities have until April 30, 2027, to submit feedback and demonstrate governance improvements, with MSCI scheduled to announce its final reclassification decision by June 30, 2027.
172 Articles
172 Articles
The Washington Post
The Seattle TimesIndonesian leader rejects market downgrade warning after stock market sell-off
Under President Prabowo Subianto, one economic initiative after another is failing. Following a warning from the US, the Indonesian stock market also took a nosedive.
GIC, Temasek deny allegations of pressuring MSCI to downgrade Indonesia
SINGAPORE - Singapore sovereign wealth funds GIC and Temasek have rejected allegations that they or their staff pressured index provider MSCI to consider downgrading Indonesia's stock market classification.The denials follow accusations on Oct 20 by former Indonesian trade minister Muhammad Lutfi that the two investors coerced MSCI to consider downgrading Indonesia.The former minister claimed that a downgrade could trigger market...
President Prabowo and his ministers emphasized that Indonesia is not afraid of the MSCI's proposed downgrade of its capital market status.
An economy with a growth rate exceeding 5% and ample foreign exchange reserves can see its stock market plummet by over 10% in a single day. Indonesia's recent market turmoil presents this seemingly contradictory situation. The immediate trigger for this turmoil was the announcement by the global index provider MSCI on October 15th that it was initiating a consultation process to reclassify the Indonesian stock market from an "emerging market" t…
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