SINGAPORE: Indonesian stocks slid on Monday, weighed down by a selloff in commodities, after a tumultuous week during which a warning from MSCI over transparency concerns triggered an US$80 billion market rout and the country’s top financial regulators resigned.
The benchmark Jakarta Composite Index fell over 5% after sliding nearly 7% last week, its steepest drop in a year, as a sharp decline in precious metals hurt investor sentiment that was already on eggshells. Other Asian markets were also lower.
“Today’s move reflects a broader global equity selloff rather than anything Indonesia-specific,” said Mohit Mirpuri, fund manager at SGMC Capital in Singapore. “It’s clearly all-hands-on-deck and we see strong intent from policymakers to find a workable solution.”
Indonesia’s Financial Services Authority late on Friday said its chief had quit along with three senior officials, including his deputy and the head of capital markets. Indonesia Stock Exchange chief Iman Rachman also resigned.
The departures came after MSCI flagged concerns about ownership and trading transparency in Indonesian stocks on Wednesday, warning that the market could be downgraded to “frontier” status if it did not resolve the issues by May.
Jeffrosenberg Lim, head of research at Maybank Sekuritas, said market participants might react to the resignations with “uncertainty and questions.”
“The speed at which market optimism returns will depend on the government’s ability to appoint credible leadership and to outline a clear, comprehensive reform roadmap for a healthier capital market,” Lim said.
Nomura on Sunday became the latest investment bank to lower its rating to “neutral” from “overweight” on Indonesian equities after similar moves by UBS and Goldman Sachs last week.
FISCAL CONCERNS RATTLE GLOBAL INVESTORS
Global investors have been rushing for the exits in Indonesia due to rising concerns about President Prabowo Subianto widening the fiscal deficit and expanding the state’s involvement in financial markets.
Investors are also worried about the central bank’s independence after Prabowo’s nephew became a Bank Indonesia deputy governor in January. The Indonesian rupiah has been stuck near a record low of 16,985 per U.S. dollar, which it touched in January. It was last at 16,775.
Daniel Tan, portfolio manager at Grasshopper Asset Management, said the recent market reaction does not feel overdone and he expects uncertainty to continue until May, when MSCI is due to reassess Indonesia’s market accessibility.
“If investors have no exposure, they should adopt a wait-and-see approach before getting involved,” he said.
Foreigners have sold a net of around $736 million worth of shares since Wednesday, according to exchange data. They sold $1 billion worth of shares in all of 2025.
On Saturday, Indonesia’s financial regulator named Friderica Widyasari Dewi as its interim chief and Hasan Fawzi as its executive chief for capital markets, a move that analysts said could help soothe investor nerves.
“We view these appointments positively, as the new leadership has hands-on experience across trading, clearing, settlement and custody, key areas highlighted by MSCI, and should be able to move swiftly on execution,” Citi strategists said in a note. – Reuters
