Indonesian stocks fall 11.57% as MSCI considers market downgrade

Indonesia’s benchmark share index, the IHSG, dropped 11.57% on 16 October 2026 following MSCI’s announcement of a consultation on whether to reclassify the country from an emerging market to a standalone market. Indonesian authorities said they would continue capital-market reforms.

MSCI opened the consultation on 15 October 2026; no final decision has been made. The index provider also acknowledged reforms already under way, including disclosure of shareholdings above 1%, more detailed investor classifications and a policy raising the minimum free float.

The Financial Services Authority, OJK, said it respected MSCI’s views and the independence of global index providers. OJK chair Friderica Widyasari Dewi said domestic equities remained attractive, citing Indonesia’s economic fundamentals, a growing investor base, competitive valuations and generally positive company performance.

OJK capital-market supervisor Hasan Fawzi said MSCI’s feedback aligned with Indonesia’s programme to accelerate market-integrity reforms, including consistent law enforcement. OJK and market self-regulatory organisations would maintain discussions with index providers and global institutional investors to communicate progress and gather policy recommendations.

Coordinating Economic Affairs Minister Airlangga Hartarto questioned the announcement’s timing but urged against negative assumptions. He said implementation of exchange rules and reform measures should be the priority, noting MSCI’s concern about Indonesia’s comparatively lengthy reform timetable.

Deputy parliamentary speaker Sufmi Dasco visited the Indonesia Stock Exchange on 16 October 2026 with Danantara chief executive Rosan Roeslani and other officials. Dasco said the visit was intended to check reform progress and that parliament had asked exchange authorities to address feedback from international index providers.