MSCI gets set to remove Indonesia from global indexes, sparks market slide to six-year low
- On Monday, Indonesian stocks plunged to a six-year low after MSCI proposed on Friday reclassifying the country from 'emerging markets' to 'standalone' status, rattling investor sentiment and raising the prospect of expulsion from major global equity benchmarks.
- MSCI had threatened a downgrade to 'frontier' status in January due to opacity in trading behavior, but said on Friday that limited progress meant even that lower status would not reflect the severity of ongoing governance concerns.
- Goldman Sachs warned in a Sunday note that full removal could trigger approximately $5.6 billion in passive fund outflows. Active funds benchmarked to these indices hold more than $8 billion in Indonesian equities, though any selling would remain discretionary.
- The Indonesia Stock Exchange cut its lower auto-rejection limit to 7% from 15% on Monday to give investors "an opportunity to evaluate and digest available information." The Financial Services Authority, or OJK, unveiled sanctions totaling $116.4 million against alleged trading manipulation.
- MSCI's warning raises stakes for President Prabowo Subianto's government, which faces negative sovereign rating outlooks from Moody's and Fitch. Analysts warn that market dislocation could trigger tighter financial conditions and spillover into the rupiah and domestic bond yields.
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118 Articles
Global Market: Indonesia stock exchange to meet MSCI after downgrade warning triggers market rout
Indonesias stock exchange will meet MSCI on Monday to seek clarity over a warning that could strip the country of its emerging-market status. The threat triggered a sharp selloff, wiping $65 billion off market capitalisation on Friday. A downgrade could prompt foreign fund outflows and weaken investor participation in Indonesian equities.
From investor favourite to investment ‘backwater’: Why Indonesia’s stock market is crashing
Indonesia is South-East Asia's biggest economy. Until recently, it was an investor darling. But now, global index provider MSCI plans to downgrade its stock indices from emerging economy to 'Standalone' — a category occupied by the likes of Zimbabwe. How did it come to this?
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
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.
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