Indonesia’s stock market has halted trading after a sharp sell-off triggered by a warning from index provider MSCI on the market’s investability.
The Jakarta Composite index plunged 8 per cent on Wednesday after MSCI said it had found “fundamental investability issues” in the Indonesia Stock Exchange’s data feed of publicly traded shares.
The sell-off triggered a circuit breaker that halted trading on the exchange during the afternoon session.
MSCI said it would stop making adjustments to Indonesian securities in its indices, including adding stocks, citing “opacity in shareholding structures and concerns about possible co-ordinated trading behaviour”.
Indonesia could be reclassified from emerging to frontier market if no resolution is made by May, said the company.
MSCI is one of the most important global index providers. Its indices are the basis of passive funds, including exchange traded funds, that track emerging markets and serve as a benchmark for many active fund managers.
A downgrade from emerging-market status to riskier frontier status could threaten to reduce capital flows into Indonesia’s markets.
“The key question for investors is whether this shows that corporate and regulatory governance in Indonesia is worse than they’d thought,” said Thomas Mathews, head of Asia-Pacific markets at Capital Economics. “So if we get a strong response from the regulators then it’s possible the market will recover quite quickly.”
The Indonesia Stock Exchange said it would continue discussions with MSCI.
Kautsar Primadi Nurahmad, corporate secretary at the exchange, said: “We are committed to doing our best to increase the weighting of Indonesian stocks in the MSCI index. This commitment is realised through strengthening market data transparency.”
He added that the exchange would continue to co-ordinate with MSCI to “ensure a shared understanding and implementation of increased information transparency”.
The Indonesian stock market hit a record high last Tuesday and rose more than 22 per cent in 2025, despite anti-government protests convulsing the country in August.
