Breaking: Indonesia Stocks Plunge 11% on MSCI Downgrade, Rupiah Tops 18,000

Indonesia’s stock market opened on Friday, 16 Oct, with an 8.01% plunge to 5,393.92, forcing the Indonesia Stock Exchange (IDX) to halt trading immediately. The Jakarta Post reported that after trading resumed, the index kept falling to more than 10% down by 02:45 GMT. CNBC Indonesia reported that at 02:34 GMT the JCI stood at 5,211.84, down 651.94 points or 11.12%. Reuters said it was the lowest level in 6 years, and the index has now fallen more than 30% since the start of the year, the worst performance among global stock markets, with cumulative foreign net selling of about $4.7 billion.

MSCI, the index provider that funds around the world use as a benchmark, announced on Thursday, 15 Oct (US time), that continuing to classify Indonesia as an Emerging Market is “no longer appropriate,” and proposed moving it to Standalone status. That means Indonesian stocks would not be included in either MSCI’s Emerging or Frontier indexes, a harsher step than the downgrade to Frontier that it had signalled back in January. The main reasons are concerns over opaque shareholder structures and trading behaviour that suggests coordination. MSCI will take feedback until April 2027 and decide by the end of June 2027.

In currency markets, Reuters reported that the rupiah weakened 0.6% to 18,000 per dollar, its weakest since August, while CNBC Indonesia put it around 18,063–18,068, about 0.69% weaker than 17,938 the previous day. Indonesia’s 10-year government bond yield rose about 8bp to 7.34%, reflecting worries about further foreign capital outflows. IDX officials said they would seek clarification from MSCI, and the head of the capital markets regulator said the announcement was unexpected. There has been no official statement yet from Bank Indonesia (BI).

The impact on major assets is still limited. The dollar (DXY) is steady around 102 after pulling back from an 18-month high on Wednesday, and gold (XAUUSD) is holding around $4,180 on continued safe-haven buying following the tech sell-off. What to watch: whether the selling spreads to other emerging markets in ASEAN, how Bank Indonesia steps in to support the rupiah, and remarks from Fed Chair Kevin Warsh at the IMF–World Bank meetings in Bangkok today. See this morning’s market overview in Forex News 16 Oct and key release times on the economic calendar