Indonesian Stocks Dive as MSCI Weighs Downgrade to Standalone Market
By Amanda Lee and Ying Xian Wong
Indonesian stocks suffered their biggest drop since the 2008 global financial crisis after index provider MSCI said the country risked being removed from its indexes, reigniting fears about the investability of the Southeast Asian economy.
The Jakarta Composite Index plunged more than 10% on Friday, on track for its biggest daily percentage drop in 18 years. The benchmark index had opened 8% lower, triggering a temporary halt.
The selloff pushed the JCI's losses this year to nearly 40%, making it the worst-performing Asian stock market. The rupiah weakened to around 18,045 against the dollar.
MSCI on Thursday launched a consultation on a potential reclassification of Indonesia from emerging-market to standalone status, which would remove the country's equities from its main indexes. Indonesia would be the first Asia-Pacific market to have a standalone status if the proposed downgrade takes place.
The latest move marks an escalation from January, when MSCI warned it could downgrade the country to frontier-market status, citing investability and transparency concerns.
Under scrutiny by global index providers and credit rating agencies, Indonesian authorities have announced reforms and sought to address market concerns. MSCI in its statement said investors' feedback suggests a frontier-market reclassification won't properly recognize the depth of the market problems.
"Market participants have indicated to MSCI that, to date, sufficient progress has not been observed consistently across the Indonesian equity market," MSCI said. "Significant concerns remain around market dysfunction, including continued suspected coordinated trading behavior and lack of evidence of meaningful enforcement."
The index provider is taking feedback through April 2027 and will announce its decision by the end of June.
Write to Amanda Lee at amanda.lee@wsj.com and Ying Xian Wong at yingxian.wong@wsj.com
(END) Dow Jones Newswires
October 16, 2026 00:57 ET (04:57 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.The articles, information, and content displayed on this webpage may include materials prepared and provided by third parties. Such third-party content is offered for informational purposes only and is not endorsed, reviewed, or verified by Morningstar.
Morningstar makes no representations or warranties regarding the accuracy, completeness, timeliness, or reliability of any third-party content displayed on this site. The views and opinions expressed in third-party content are those of the respective authors and do not necessarily reflect the views of Morningstar, its affiliates, or employees.
Morningstar is not responsible for any errors, omissions, or delays in this content, nor for any actions taken in reliance thereon. Users are advised to exercise their own judgment and seek independent financial advice before making any decisions based on such content. The third-party providers of this content are not affiliated with Morningstar, and their inclusion on this site does not imply any form of partnership, agency, or endorsement.
Popular
5 Stocks to Sell for Tax-Loss Harvesting
33 Undervalued Stocks to Buy Before the Market Shifts Again
Ask the Analyst: What Is the Best Source for Low-Risk Tax-Free Income?
The Smartest Moves for Bond Investors Today, and What to Do When You Have Too Many Investments
United States