MSCI Issues Crucial Warning - Indonesian Stocks in Deep Red Territory
Shares listed on the Indonesia Stock Exchange are under heavy pressure on Wednesday 28 January 2026 after investment research firm Morgan Stanley Capital International (MSCI) issued a strong warning on Indonesian stocks.
MSCI is a very influential entity in global markets as it creates the stock indices that determine where trillions of dollars are invested. MSCI provides stock indexes, portfolio risk and performance analytics, and governance tools to institutional investors and hedge funds.
The warning that sent Indonesia's stock market into a tailspin involves weak market transparency and investability. If Indonesian regulators fail to improve market transparency and data reliability by May 2026 then MSCI may slash the percentage of Indonesian stocks in the MSCI Emerging Markets Index and/or downgrade Indonesian stocks from "Emerging Market" to "Frontier Market". This would be a massive blow, as it would disqualify Indonesia from the portfolios of thousands of global institutional funds.
Investors were alarmed by this warning. Hence, in the first trading session of Wednesday 28 January 2026 Indonesia's benchmark stock index (IHSG) fell 7.36 percent to the level of 8,319.29 points.
We discuss this matter in much more detail in our January 2026 monthly report.