Indonesia stocks hit 6-year low after MSCI downgrade warning
Why it matters: Goldman Sachs estimated a full MSCI removal could drive $5.6 billion in passive outflows from Indonesian equities.
Indonesian stocks fell to a six-year low Monday after MSCI warned it could remove the market from its emerging-markets indexes and shift it to standalone status. The benchmark index dropped more than 5% in early trading after tumbling 11.6% on Friday, its worst session since 1998, while exchange data cited by Reuters showed about $65 billion in market value was wiped out that day. The Indonesia Stock Exchange cut its daily down limit to 7% from 15% and planned talks with MSCI to seek clarification. MSCI cited concerns over coordinated trading behavior, weak enforcement and opacity in ownership, raising the risk that Indonesian stocks could be excluded from indexes tracked by global funds.