Indonesia's equity and bond markets extended losses on Monday after MSCI Inc. warned of a potential two-step downgrade from emerging to standalone status. The Jakarta Composite Index fell 5.4%, extending its worst rout in nearly 30 years and pushing the benchmark to its lowest level since 2020. The selloff deepened as losses spread to the bond market and the rupiah currency.
Global funds have pulled a net $5.1 billion from Indonesian equities in 2026, heading toward the largest annual outflow on record. In response, regulators tightened trading limits for individual stocks to 7% and held meetings with financial influencers and MSCI executives to seek clarity. Billionaire Prajogo Pangestu-linked firms pledged 2.5 trillion rupiah ($138 million) in share buybacks, while Franky Widjaja's Sinar Mas Group proposed a 1 trillion rupiah purchase.
A full MSCI removal could trigger roughly $5.6 billion in passive outflows, with an additional $2.7 billion at risk if FTSE Russell follows suit. Analysts warn that a weaker rupiah would further erode the appeal of Indonesian debt for foreign investors already concerned about market structure and governance.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing