Indonesia's stock market plunged as much as 11 percent on Friday, its steepest decline in nearly three decades, after global index provider MSCI warned that the country could lose its emerging-market status and be excluded from major global equity indexes. The surprise announcement triggered a fresh wave of selling, raising fears of further capital flight from Southeast Asia's largest economy.
The Jakarta Composite Index fell to a six-year low, recording its sharpest intraday decline since January 1998, during the Asian financial crisis. Trading was temporarily halted for 30 minutes following the selloff. The Indonesian rupiah also weakened 0.6 percent to 18,000 against the US dollar, its lowest level since August.
The crash deepened an already punishing year for Indonesian equities. The benchmark index has lost nearly 39 percent in 2026, making it the world's worst-performing major stock market. Foreign investors have withdrawn approximately $4.9 billion from Indonesian equities this year, according to Bloomberg data.
But what has alarmed investors is not merely the prospect of a downgrade. MSCI is considering a far more severe step that could effectively remove Indonesia from global investment benchmarks followed by major institutional investors.
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