FX.co ★ Indonesia Equities Under Pressure on MSCI Assessments

Indonesian shares sank 126 points, or 2.0%, to 6,092 in Thursday morning trade, deepening the previous session’s decline as caution mounted ahead of MSCI’s Global Market Accessibility Review early Friday and the June 23 Annual Market Classification Review, both pivotal for Indonesia’s benchmark status.

Attention also shifted to Bank Indonesia’s policy decision due later in the day, with markets largely pricing in a hawkish tone following a cumulative 75 bps in rate hikes since May aimed at supporting the rupiah and curbing inflation. However, the higher borrowing costs risk further weighing on domestic demand.

Sentiment drew some support from a sharp rebound in U.S. futures after the Federal Reserve, under new chair Kevin Warsh, left interest rates unchanged, as expected, while signaling a more cautious policy outlook.

All sectors moved lower, led by financials, infrastructure, industrials, and energy. Major decliners included Telkom Indonesia (-7.8%), Transcoal Pacific (-6.6%), Elnusa (-5.7%), and Semen Indonesia (-3.8%).