Jakarta Stocks Plunge 11% in Worst Drop Since 1998 After MSCI Moves to Strip Emerging-Market Status

Indonesian stocks tumbled more than 11% on Friday, the steepest one-day drop since 1998, after index provider MSCI said the Jakarta market was no longer worthy of “emerging market” status.

The benchmark Jakarta Composite Index fell 8% at the open, which triggered a 30-minute trading halt, Reuters reported. When trading resumed, losses deepened to as much as 11%.

The index has now lost nearly 40% this year, making it the worst-performing share market in the region, according to Reuters.

MSCI’s downgrade proposal

“MSCI considers Indonesia’s continued classification as an Emerging Market no longer appropriate and is launching a consultation on a proposal to reclassify Indonesia as a Standalone Market,” the index provider said in a statement.

A “standalone” classification would exclude Indonesian stocks from the global indexes tracked by billions of dollars in passive investment, forcing funds that track or are measured against the indexes to sell, Reuters reported.

The proposal came a month ahead of a scheduled review, and MSCI plans a final decision by the end of June 2027 after a consultation period, according to Reuters. Reuters Breakingviews noted that the move escalates an earlier warning that Indonesia could be moved from emerging to frontier-market status. About $1.4 trillion in funds follow MSCI’s Emerging Markets Index, according to the company.

Rupiah sinks toward record low

The rupiah weakened to 18,070 per U.S. dollar, the lowest level since early August and close to its all-time low of 18,190, Reuters reported.

Elsewhere in emerging Asia, markets held steadier. South Korean equities rebounded 2.5% after losing more than 7% in the previous session, while stocks in Taiwan and Singapore each added about 1%. Malaysian shares slipped, according to Reuters.

Reporting based on coverage by Reuters and Reuters Breakingviews.