Indonesia Stocks Suffer Biggest Daily Slump Since 1998 as MSCI Weighs Downgrade; Moody's, Fitch Cut Outlook

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• Indonesia's Jakarta Composite Index (JKSE) plunged more than 11% Friday, its biggest one-day drop since January 1998; after the index fell 8% shortly after the open, the exchange halted trading for 30 minutes. MSCI said Thursday it would consult on reclassifying Indonesia from emerging-market to standalone-market status, citing concerns over transparency, ownership structures, and suspected collusive trading, saying reform measures have not yet shown sufficient evidence of improved market governance and enforcement.
• A downgrade could trigger further outflows as passive funds tracking emerging-market indexes sell Indonesian holdings. The index is down about 40% this year, the worst performer in the Asia-Pacific region; the rupiah has approached a record low against the dollar, and foreign investors have posted $4.7 billion in net selling. The same day, the MSCI Asia-Pacific index rose 1.1%.
• MSCI is maintaining a freeze on certain index changes for Indonesian securities, including new inclusions and segment upgrades; the consultation period runs to April 30, 2027, with a final decision due by June 30. The Indonesia exchange said it has taken steps to improve transparency and market integrity, and CEO Jeffrey Hendrik has asked MSCI for further explanation. Separately, Moody's and Fitch cut Indonesia's credit rating outlook to negative, citing policy-credibility concerns.

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