Indonesian stock market crashes, regulatory authorities issue emergency statement!

On January 29, the Indonesian stock market continued its sharp decline from the previous day. The Jakarta Composite Index fell as much as 10.1% in the morning, reaching 7,481.99 points, the lowest since August 2025. The index also triggered trading halt mechanisms multiple times. In the afternoon, as relevant Indonesian authorities issued positive response information, the decline of the Jakarta Composite Index narrowed.

The market consensus attributes the recent sell-off in Indonesia’s stock market to the statement made by MSCI on January 27.

It is reported that on January 27, MSCI issued a public warning regarding the evaluation of free float shares and market investability of Indonesian stocks, prompting foreign investors to reassess the investment value of the Indonesian stock market, with investor sentiment clearly under pressure.

In the statement, MSCI announced that it would immediately suspend several adjustment measures related to Indonesian indices, including halting the addition of new index constituents and freezing the increase of free float share ratios, until Indonesian regulators take concrete actions to address longstanding market issues.

Data from the exchange show that overseas investors sold a net total of 6.2 trillion Indonesian rupiah (approximately $371 million) worth of Indonesian stocks on Wednesday, the largest scale since April 16.

Goldman Sachs and UBS have both downgraded their ratings for the Jakarta Composite Index. Goldman Sachs stated that in extreme cases, more than $13 billion could flow out of the Indonesian stock market.

Related concerns also impacted the Indonesian rupiah, which temporarily fell 0.5% against the US dollar, marking the largest decline since October last year, lagging behind other Asian currencies.

On January 29, Indonesian financial regulators and the stock exchange issued statements to the media at 06:00 GMT (14:00 Beijing time) regarding recent market developments. The Indonesian Finance Minister stated that despite market shocks, Indonesia’s economic fundamentals remain solid. The Chief Economic Minister declared that the government has asked securities exchange operators to implement reforms and increase transparency to respond to the market downturn.

Indonesian financial regulators and securities regulators also made statements in succession.

The Indonesian financial regulatory authority said that it will take multiple measures to respond to MSCI’s announcement. If necessary, further policy adjustments will be ensured. Both new and existing listed companies will be required to meet a 15% public shareholding ratio.

The Indonesian securities regulator stated that Indonesia is currently awaiting MSCI’s response to the proposed adjustments, hoping to resolve these issues before March. Meanwhile, the exchange will verify the related-party relationships of shareholders holding less than 5% of shares.

On January 28, the Indonesia Stock Exchange issued a statement emphasizing that it highly values MSCI’s feedback, considering it a key step to enhance the credibility of Indonesia’s capital market. The statement mentioned that efforts will continue to improve market data transparency and provide more accurate and reliable information, aligning with global best practices and stakeholder expectations.

The Indonesia Stock Exchange also said it will continue consultations with the Indonesian Financial Services Authority and the Central Securities Depository to work with MSCI. To ease market concerns, Indonesian regulators plan to raise the minimum free float ratio from the current 7.5% to between 10% and 15%, with a long-term goal of 25%, although no specific timetable has been set.

Additionally, Indonesian financial regulators are preparing stricter rules for small enterprises listing. The Indonesia Stock Exchange reminded that even if companies expand their free float shares, the market still needs more liquidity to absorb the increased stock supply.

The Indonesia Stock Exchange operator told the media on Wednesday that it will work to respond to the index provider’s call for increased transparency and will cooperate with the Indonesia Stock Exchange to reach a consensus, completing related work before MSCI’s reassessment of the country’s market access in May.