Doge

The Indonesian stock market has been hit by a “perfect storm” this week, specifically on January 28 and 29, 2026, leading to consecutive trading halts.

Here is a breakdown of the situation:

1. The Market Crash

• Back-to-Back Halts: The Jakarta Composite Index (JCI) plunged over 8% on Wednesday and crashed further by 10% on Thursday morning, triggering the exchange’s circuit breakers both times.
• Worst Performance in Decades: This marks the steepest two-day decline for the Indonesian market in nearly 30 years.

2. Why is this happening? (The MSCI “Warning”)

The primary catalyst is a scathing report from MSCI (Morgan Stanley Capital International) regarding Indonesia’s investability:

• Potential Downgrade: MSCI warned that Indonesia risks being downgraded from “Emerging Market” status to “Frontier Market” if structural issues aren’t fixed by May 2026.
• The “Free Float” Problem: MSCI highlighted that many large Indonesian companies have very low public ownership (Free Float). They found that over 200 stocks have less than 15% of shares available for public trading, making the market prone to manipulation.
• Concentrated Ownership: Power is concentrated in the hands of a few wealthy tycoons, which MSCI argues obscures true market value and limits liquidity for international investors.

3. Economic Impact

• Capital Flight: Foreign investors are fleeing. Goldman Sachs estimates that a full downgrade could trigger a passive fund outflow of approximately $13 billion.
• Regulatory Panic: The Indonesian Stock Exchange (IDX) is now under immense pressure to force companies to increase their free float and improve transparency to prevent a total exit of foreign capital.

Quick Reference: Indonesia’s Circuit Breaker Levels

Level	Drop Threshold	Action
Level 1	5% (or 8% in high volatility)	30-minute suspension
Level 2	10%	Additional 30-minute suspension
Level 3	15%	Trading suspended for the remainder of the day