FX.co ★ Indonesia Market Turns Lower Amid MSCI Scrutiny

Indonesian equities fell 37 points, or 0.6%, to 6,135 on Friday afternoon, reversing earlier gains and extending losses to a third consecutive session. Sentiment weakened after MSCI highlighted concerns over market transparency and instances of coordinated trading, just days before a potential downgrade to frontier-market status that, according to Reuters, could prompt capital outflows of around USD 13 billion.

Investors were also increasingly wary of the drag from higher borrowing costs on household spending, following Bank Indonesia’s cumulative 100 bps of rate hikes since May aimed at supporting the rupiah and curbing capital flight.

Despite the latest pullback, the benchmark remains on track for a weekly gain of about 2%—its second straight weekly advance—supported by optimism over a possible US–Iran deal, even as worries persist about a more hawkish Federal Reserve.

Losses were broad-based across industrials, financials, property, and basic materials. Notable decliners included Telkom Indonesia (-6.8%), Sarana Menara Nusantara (-6.5%), Barito Pacific (-4.2%), and Bank Mandiri (-3.4%).