Indonesia Launches Market Reforms After MSCI Downgrade Warning
Indonesia introduced new stock market oversight measures and account-freezing powers after MSCI warned it could demote the country's exchange to standalone market status.
The Indonesia Stock Exchange (IDX) introduced new measures on October 26 to combat market manipulation following a warning from MSCI that the country could be demoted to standalone market status. The warning cited concerns over opaque and coordinated trading practices, which triggered the deepest two-day stock selloff in Indonesia's history on October 16 and 19, pushing the main index to its lowest level since 2020.
To restore market integrity, the IDX will expand its committee for identifying stocks with concentrated ownership to include foreign investor representatives and independent academics. Starting in November, the exchange will launch investigations into suspected coordinated trading and freeze suspicious accounts. Additionally, 80 companies with high shareholding concentrations will be excluded from the main Jakarta index beginning November 2.
President Prabowo Subianto reacted to the situation by stating that MSCI was attempting to "intimidate" Indonesia, though he asserted the nation would not be afraid. Other regulatory responses include extending share buyback policies until June 2027 to stabilize the market.
