Indonesian stock index drops 11.6% after MSCI reclassification proposal

Indonesia's Jakarta Composite index fell 11.6% on October 16 after MSCI proposed moving the country's market from emerging to standalone status.

Interfax described the decline as the index's sharpest daily fall since January 1998. The benchmark has lost about 40% since the start of 2026. Indonesian business publications also reported an 11.57% decline at Friday's close.

MSCI launched the consultation on October 15, saying it no longer considered continued emerging market classification justified. The announcement is a proposal and the reclassification has not yet been decided.

In January, MSCI warned that Indonesia could move to frontier market status. It now considers that option insufficient to reflect the depth of the problems. The company cited continuing investor concerns over opaque ownership structures, suspected coordinated trading and inadequate oversight.

Indonesian authorities expanded disclosures for shareholders holding more than 1%, introduced more detailed investor classifications and developed a plan to raise the minimum free float to 15%. In June, MSCI emphasized the need for consistent implementation of those reforms.

The provider intends to change the market's status unless the consultation produces convincing evidence of substantial improvement. It plans to announce a final decision no later than the end of June 2027.