Indonesia exchange urges local institutions to invest after stock slump

The Indonesia Stock Exchange (BEI) has urged domestic institutional investors, including pension funds and insurers, to increase their participation in equities to help support the IHSG following a sharp sell-off linked to MSCI’s proposed market reclassification.

Speaking in Jakarta on 19 October 2026, BEI president director Jeffrey Hendrik said Indonesia’s capital market fundamentals remained strong and offered opportunities for local institutions. He said the exchange had held broad discussions with various parties but had not met individual institutions specifically about the current market conditions.

The IHSG dropped 11.57 per cent on 16 October 2026, among its steepest daily declines since the 1998 financial crisis. The selling followed MSCI’s opening of consultations on moving Indonesia out of its Emerging Market category and into Standalone Market status.

The consultation runs from 15 October 2026 to 30 April 2027, with a final decision due no later than 30 June 2027. The proposed change is not final.

Separately, the Financial Services Authority (OJK) said non-bank financial institutions were beginning to adjust risk management for their share portfolios. Iwan, OJK’s deputy commissioner overseeing insurance, guarantees and pension funds, said insurers had been encouraged to assess risk in every investment decision, while equities remained a means of improving returns.

OJK said the impact varied by company, depending on equity allocations, institutional needs and investment policies. Iwan said the regulator could not yet determine whether the MSCI-related pressure would ease soon; the market’s direction would depend on conditions and measures taken by the government and OJK.