Indonesia Stocks Plunge 11% as MSCI Warns It May Drop the Country From Its Indexes

Indonesia Stocks Plunge 11% as MSCI Warns It May Drop the Country From Its Indexes

Indonesia's benchmark stock index suffered its worst one-day crash in 28 years after MSCI threatened to remove the country from its global indexes.

· 1 min read ·
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The Jakarta Composite Index fell 11 percent on Wednesday after MSCI Inc., a major index provider, warned that Indonesia may no longer qualify as an emerging market [263338]. The drop marked the biggest single-day fall in 28 years [263873].

MSCI builds stock market indexes that guide global investors on where to put their money [263129]. If MSCI removes Indonesia from its widely followed benchmarks, Indonesian stocks would no longer appear in those indexes, reducing demand from global funds that track them [263338]. The warning raised fears that billions of dollars in foreign funds could leave the country [263873].

MSCI cited concerns over market accessibility and transparency. It said it would review Indonesia's status in the coming months before making a final decision [263873].

Indonesian officials responded quickly, saying the government is committed to improving market rules and will work with MSCI to address its concerns [263873]. Analysts warned that the sell-off may continue until MSCI's review is complete, and that a downgrade could raise borrowing costs and weaken the rupiah, Indonesia's currency [263873].

Indonesia is Southeast Asia's largest economy, and its stock market has been a favorite among foreign investors seeking growth in emerging markets [263873].

Sources

MSCI threatens Indonesia's market status #263129Indonesian Stocks Plunge 11% as MSCI Threatens Index Removal #263338Indonesia Stocks Crash Most in 28 Years After MSCI Downgrade Warning #263873

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