FX.co ★ Indonesian Shares Suffer Biggest Daily Drop Since 1998 on MSCI Warning

Indonesian stocks plunged 630 points, or 10.8%, to around 5,233 by midday Friday, marking their sharpest one-day drop since January 1998 and sending the market to a six-year low. The selloff followed a warning from MSCI that it may downgrade Indonesia to standalone market status, citing ongoing concerns over investability in Southeast Asia’s largest economy. Such a move could trigger substantial capital outflows; Goldman Sachs has previously estimated potential withdrawals of up to $13 billion. MSCI’s final decision is expected by June 30, 2027. Indonesia’s financial regulator said it is “carefully reviewing and paying serious attention to MSCI’s assessment.”

Losses were broad-based, with all major sectors retreating sharply, led by basic materials, energy, financials, and infrastructure. The country’s four largest banks dropped between 8.5% and 14%, while Telkom Indonesia fell 11.7%, Astra International declined 9.6%, and Jasa Marga slumped 14.8%. For the week, the market is on course for a steep decline, down about 14% so far and erasing earlier modest gains.