Indonesian stocks edge higher after steps to curb rout on MSCI expulsion fears

what happened

Indonesian stocks rose on Tuesday after Jakarta authorities introduced measures to restrict selling. The market had lost a record $82 billion over two days following a warning from index provider MSCI that Indonesia could be removed from its global indexes. Jakarta's benchmark gained 3% after hitting a six-year low the previous session. The market, the worst performer in the world this year, is down about 40% for 2026.

MSCI said it was considering moving Indonesia from emerging-market to "standalone" status, a harsher step than expected. The exchange halved the daily limit on share price declines to 7% from 15%. The rupiah strengthened to 18,010 per US dollar but stayed close to its record low of 18,190 set in June. The financial regulator OJK announced fines totalling 2.1 trillion rupiah over alleged manipulation in three companies' shares, and the IDX said it would exclude stocks with high concentrated ownership from its benchmark.

why it matters

For investors, the main risk is a possible downgrade of Indonesia's market status, which could drive capital outflows from local assets. Fitch said it does not expect the consultation to have immediate credit implications, though external pressure could raise government borrowing costs.

market impact

Indonesian stocks and rupiah: a possible MSCI status downgrade pressures capital inflows and the currency

tags

instruments