Global index provider MSCI has proposed downgrading Indonesia from an Emerging Market to a Standalone Market, sending Indonesian stocks plunging as much as 11.4% on Friday.
A downgrade to Standalone Market status could remove Indonesian stocks from major global emerging-market indexes, potentially forcing international investment funds to sell billions of dollars in shares. This could trigger further foreign capital outflows, weaken the rupiah, and make Indonesia less attractive to global investors. The warning puts pressure on Indonesian regulators to improve market transparency and restore investor confidence.
MSCI raised serious concerns about Indonesia's stock market, citing unclear shareholder ownership, concentrated shareholdings, and suspected coordinated trading.
The announcement triggered heavy selling in Jakarta, with major banks including BCA, BRI, and Bank Mandiri falling nearly 15%.
MSCI said Indonesia's current Emerging Market classification is no longer appropriate despite recent government reforms.
However, the downgrade is not final. MSCI will announce its decision by June 30, 2027.