By: Ainur Rohmah
Indonesia’s stock market suffered a dramatic sell-off on Friday after global index provider Morgan Stanley Capital International (MSCI) proposed removing the country from the global indexes tracked by investors, essentially sending it into the isolated backwater status of a standalone market.
The move would strip the country of its emerging-market status over concerns about opaque shareholding structures, suspected coordinated trading and weak enforcement. The plunge exposed a deeper problem for Southeast Asia’s largest economy: despite repeated promises of reform, authorities have yet to convince international investors that the market operates with sufficient transparency and integrity.
This is not a surprise. In financial circles in Jakarta, it has been an open secret for decades that stocks are often manipulated to benefit wealthy insiders to the detriment of clueless investors. MSCI, it seems, has finally had enough.
The Jakarta Composite Index fell 8.01 percent at the opening on Oct. 16, triggering an automatic 30-minute trading halt by the Indonesia Stock Exchange (IDX). It eventually closed down 11.57 percent at 5,185.11, with steep losses across major stocks.
In January, the index had been halted twice after MSCI froze certain changes involving Indonesian securities and warned it could relegate the IDX to frontier market status. Frontier would look good compared to the depths of standalone, where it would keep company with Argentina (demoted due to capital controls), Panama, Lebanon and Bosnia.
The latest sell-off adds further pressure to equities already weakened by sustained foreign selling. The index has fallen more than 30 percent in 2026…
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