Indonesia stocks hit 6-year low after MSCI downgrade threat
Why it matters: A full MSCI removal could trigger up to $5.6 billion in passive outflows and deepen pressure on the rupiah.
Indonesian stocks fell to a six-year low after MSCI warned it could move the market from emerging-market status to standalone, a step that would strip local shares from major global indexes. The Jakarta Composite dropped more than 5% Monday after an 11.6% plunge Friday, its worst session since 1998, while the rupiah weakened near a record low. MSCI cited concerns about coordinated trading, opaque ownership and weak rule enforcement. In response, the Indonesia Stock Exchange cut its daily lower limit to 7% from 15% and scheduled talks with MSCI. Goldman Sachs estimated a full removal could spark $5.6 billion of passive outflows, with active funds holding more than $8 billion benchmarked to the indexes.