Indonesian equities opened sharply lower on Friday, plunging 470 points, or 8%, to 5,393 after MSCI proposed reclassifying the country as a standalone market, citing persistent governance concerns and indications of coordinated trading activity. A final decision is expected by June 30, 2027. Despite recent reforms, MSCI highlighted weak regulatory enforcement and broader market dysfunction. The Financial Services Authority responded by pledging further improvements, emphasizing that domestic markets remain fundamentally attractive. Goldman Sachs earlier estimated that a downgrade could trigger as much as $13 billion in outflows, as active managers are likely to trim exposure to avoid deviations from their benchmarks. Such large-scale liquidations risk sharply weakening the rupiah and sapping market liquidity, exacerbating currency pressures at a time when equities have already fallen more than 30% this year, making Indonesia the world’s worst-performing equity index in 2026. The sell-off was broad-based, led by financials, transportation, non-cyclical sectors, and healthcare.