Indonesia Stocks Crash Most in 28 Years After MSCI Downgrade Warning

Indonesia's stock market suffered its biggest one-day fall in 28 years on Wednesday. The sharp drop came after MSCI, a global index provider, warned it may downgrade Indonesia's market status. MSCI is a company that builds stock market indexes used by investors worldwide. A downgrade would move Indonesia to a lower category, which could push foreign investors to sell their holdings. The benchmark Jakarta Composite Index fell sharply as investors rushed to sell. The warning raised fears that billions of dollars in foreign funds could leave the country. 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. Indonesian officials responded quickly. They said the government is committed to improving market rules and will work with MSCI to address its concerns. Analysts said the sell-off may continue until MSCI's review is complete. They warned that a downgrade could raise borrowing costs and weaken the rupiah, Indonesia's currency. Indonesia is Southeast Asia's largest economy. Its stock market has been a favorite among foreign investors seeking growth in emerging markets.