From BigGo Finance · BigGo Finance · · 1m 40s
MSCI Reclassifies Indonesia to Standalone Market
MSCI moves Indonesia to standalone market status as foreign investors pull $5.1 billion.
In brief
MSCI moves Indonesia to standalone market status as foreign investors pull $5.1 billion. MSCI reclassifies Indonesia's stock market to standalone status, triggering $5.1 billion foreign outflows and a six-year low in the Jakarta Composite Index. Originally reported by BigGo Finance.
MSCI Proposes Reclassification
MSCI plans to reclassify Indonesia's stock market directly from 'Emerging Market' to 'Standalone Market' status, skipping the usual intermediate 'Frontier Market' tier.
Jakarta Composite Index Drops
The Jakarta Composite Index touched 4,907.37, its weakest level since October 2020, after plunging 11.57% in its biggest single-day drop since 1998.
Foreign Outflows Reach $5.1 Billion
Net foreign outflows of about $5.1 billion have occurred year-to-date, with foreign ownership falling from 27% to 25%.
Goldman Sachs Estimates
Goldman Sachs estimates $5.6 billion passive fund outflows if Indonesia is removed from MSCI Emerging Markets Index, with $2.7 billion at risk if FTSE Russell follows.
Stock Exchange Tightens Limits
The Indonesia Stock Exchange tightened daily stock decline limits to 7% from 15% to manage volatility.
Regulators Issue Fines
Indonesia's Financial Services Authority issued over $100 million in fines for suspected irregular trading and opaque ownership structures.
Sovereign Wealth Fund Injection
Indonesian sovereign wealth fund Danantara plans to inject $5 billion into companies over six to nine months to support the market.
Market Pressure Continues
Indonesian rupiah weakened to as much as IDR 18,040 per dollar, approaching the record low of 18,190 set in June.
MSCI Consultation Period
MSCI's reclassification consultation runs through April 30, 2.027, with a final decision expected by June 30, 2027.
Goldman Sachs Strategy
Goldman Sachs maintains an underweight rating on Indonesian equities due to uncertainty over index classification and weak corporate earnings.
The bottom line
MSCI reclassifies Indonesia's stock market to standalone status, triggering $5.1 billion foreign outflows and a six-year low in the Jakarta Composite Index.
