Indonesia Stocks Sink 8% at Open after MSCI Downgrade Risk

Indonesian equities opened sharply lower Friday, tumbling 470 points or 8% to 5,393 after MSCI proposed downgrading the country to standalone market status, citing persistent governance concerns and suspected coordinated trading. A final decision is due June 30, 2027. Despite reforms, MSCI flagged weak enforcement and market dysfunction. The Financial Services Authority pledged continued improvements, stressing domestic markets remain attractive. Goldman Sachs earlier estimated a downgrade could trigger up to $13 billion in outflows, with active managers likely to cut exposure to avoid benchmarking mismatches. Massive liquidations risk severely weakening the rupiah and draining liquidity, compounding FX pressure as equities have already slumped more than 30% this year, making Indonesia the world’s worst-performing index in 2026. Selling was broad-based, led by financials, transport, non-cyclicals, and healthcare.