The IDX Composite (Indeks Harga Saham Gabungan or IHSG) opened with a sharp drop in trading on Friday, the 16th of October, as it immediately touched its lowest level and, subsequently, triggered an immediate, temporary trading halt.
IHSG opened at 5,393.92, down 469.86 points or 8.01% compared to yesterday’s trading close at 5,863.78. The total trading volume was recorded at 53.6 million lots with a transaction value of Rp922.33 billion. The majority of stocks have been trading in the red since the market opened this morning, with 595 stocks declining, 14 stocks advancing, and 33 stocks remaining stagnant.
The decline in IHSG was triggered by an announcement from Morgan Stanley Capital International (MSCI) regarding a potential downgrade of Indonesia’s capital market status from “Emerging Market” to “Standalone Market.” This matter is currently under consultation with market participants, as MSCI welcomes feedback from market participants on this reclassification proposal for the MSCI Indonesia Indexes until the 30th of April, 2027. Afterwards, MSCI will announce its decision on or before the 30th of June, 2027.
In its announcement, MSCI indicated a potential downgrade in status, driven by persistent concerns regarding investment accessibility and the governance of the Indonesian stock market. Market participants have raised serious questions about the investability of the Indonesian stock market.
“As part of the June 2026 Market Classification Review, MSCI reported that market participants had raised significant concerns regarding the investability of the Indonesian equity market, including persistent opacity in shareholding structures and suspected coordinated trading behaviour,” the index provider said in a press statement published on Thursday, the 15th of October.
MSCI also stated, “Market participants have indicated to MSCI that, to date, sufficient progress has not been observed consistently across the Indonesian equity market. Despite the announced reforms, significant concerns remain around market dysfunction, including continued suspected coordinated trading behaviour and lack of evidence of meaningful enforcement.”
Following the MSCI announcement, the Indonesian rupiah (IDR) weakened significantly against the United States dollar (USD) at the opening of trading on Friday, the 16th of October. This decline pushed the rupiah past the level of IDR 18,000 per US dollar.
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