FX.co ★ Indonesia Shares Sink to 2-Month Low on MSCI Warning

On Wednesday morning, Indonesia's IDX Composite Index experienced a significant decline, dropping 482 points, or 5.3%, to 8,502, effectively negating the gains of the previous two sessions and reaching its lowest level since late November. This downturn was attributed to a cautionary statement from MSCI Inc., which indicated that Jakarta might be downgraded to frontier-market status. Concerns were raised regarding investability and the concentrated ownership structure of listed companies. As a result, the index compiler announced a halt to certain changes until these issues are addressed by regulators. Additionally, apprehension grew ahead of next week's release of crucial domestic economic data, including January's inflation figures, December's trading statistics, and the GDP data for the fourth quarter. Meanwhile, there was increased debate over the cost-benefit analysis and diplomatic implications of Indonesia's decision to join the Board of Peace, especially following reports that President Trump allegedly requested a USD 1 billion contribution for permanent membership. Across the board, all sectors suffered losses, with infrastructure, property, and basic materials being particularly affected. Notable declines were seen in companies such as Bumi Resources (-14.5%), Telkom Indonesia (-6.6%), Bank Mandiri (-2.5%), Bank Central Asia (-2%), and Alamtri Resources (-1.8%).