MSCI prepares to remove Indonesia from global indexes, sparks market slide to six-year low
The benchmark Jakarta stock index has fallen more than 30% in 2026.
Indonesia's stock market is set to be removed from global indexes, according to MSCI, a significant blow that has led to a market slide to a six-year low. MSCI stated on October 16 that it intends to downgrade Indonesia to "standalone" status, which would exclude Indonesian stocks from global indexes used by billions of dollars in passive investment.
The move was announced after MSCI's review of the market was extended by seven months to June 2027. Jakarta stocks experienced a 10% plunge to a six-year low early on the day of the announcement, while the rupiah weakened to its weakest level since August. Indonesian equities have been struggling since January, when MSCI froze Indonesia in its indexes and threatened a downgrade to "frontier" status due to concerns over ownership and trading transparency.
MSCI believes significant issues remain in the market, and believes a downgrade to "frontier" status would not accurately reflect the depth of the problems. Indonesia's financial regulator and finance minister have not yet commented on the MSCI announcement, and some analysts believe the move reflects poorly on the country's efforts to address market transparency issues.
The downgrade is seen as a wake-up call for Indonesia, with some arguing that more needs to be done to sanction those involved in stock manipulation.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
