Indonesia Stocks Hit Six-Year Low as MSCI Proposes Reclassification

Indonesia’s Jakarta Composite fell more than 5% Monday, Oct. 19, to a six-year low after index provider MSCI proposed reclassifying the country, a move estimated to prompt $5.6 billion in passive outflows.

The proposal would move Indonesia directly from emerging-market status to a standalone market, potentially removing its stocks from major global indexes. The Jakarta Composite opened down 8% on Oct. 16, the first trading session after MSCI announced its consultation, triggering a 30-minute trading halt. Intraday losses exceeded 11%.

The $5.6 billion scenario assumes Indonesia is fully removed from MSCI’s emerging-market indexes. The amount equals about 18 days of average trading volume across constituents of the MSCI Indonesia Investable Market Index. A separate scenario in which FTSE Russell also reclassifies Indonesia could add $2.7 billion in outflows.

MSCI cited investor concerns about ownership transparency and suspected coordinated trading, saying reforms have not been applied consistently across the market. During the consultation, MSCI will keep freezing increases to Indonesian stocks’ index weights and additions of new constituents. Feedback is due by April 30, 2027, with a final decision due by June 30, 2027.