---
title: "Jakarta stocks fall again as MSCI proposes dropping Indonesia from emerging markets"
url: "https://etf.net/news/indonesia-stocks-fall-msci-proposes-cut-2026-10-19"
published_at: "2026-10-19T12:22:42.766Z"
updated_at: "2026-10-19T13:27:20.592Z"
byline: "ETF.net Research"
---

# Jakarta stocks fall again as MSCI proposes dropping Indonesia from emerging markets

The benchmark is down 14.8% in two sessions. MSCI will not decide until 2027, and no passive selling is required yet.

By ETF.net Research. Published Oct 19, 2026.

Indonesian stocks fell again on Monday after index provider MSCI proposed taking the country out of its emerging-market indexes and classifying it as a standalone market.

MSCI sorts markets into developed, emerging, frontier and standalone. A standalone classification leaves a country's stocks in their own MSCI index, outside the emerging-market and frontier benchmarks that global funds track.

MSCI reserves the label for a severe deterioration in market access, size or liquidity. It said a frontier classification "would not properly recognize the depth of the market problems."

Most recently, standalone was awarded to Russia following its invasion of Ukraine in 2022 and before that, to Argentina in 2021 due to a failure of capital controls.

The Jakarta Composite, Indonesia's benchmark, closed at 4,996.61, down **3.6%**. It had fallen as much as 5.4% during the session.

On Friday, the index lost 11.6% - its steepest fall since 1998. From Thursday's close, the two-day drop is 14.8%, and the index is down 42% this year.

Chart: Jakarta Composite fell **14.8%** from Thursday through Monday

The Indonesia Stock Exchange halted trading on Friday at 8:58 a.m. Jakarta time, after an 8% decline, and said trading would resume at 9:28 a.m. On Monday, it halved the maximum daily fall in an individual stock to 7%. Chief executive Jeffrey Hendrik said the tighter limit had calmed the panic, citing an afternoon reading of about 5%, short of the new 7% limit.

"The MSCI announcement was unexpected to us, causing a market panic," Hendrik said, ahead of a Monday meeting the exchange had sought with MSCI.

MSCI announced the proposal at 4:40 p.m. Eastern time on Thursday, an unusual time for any market. Feedback runs until April 30, 2027, and MSCI said it will announce a ruling on or before June 30, 2027.

MSCI has not set a date for any change to take effect. MSCI said it expects to proceed unless the consultation identifies "clear evidence of material improvements in market governance and functioning."

MSCI said participants had raised concerns about "persistent opacity in shareholding structures and suspected coordinated trading behavior," and that significant concerns remain about enforcement. Authorities have announced reforms, including disclosure of holdings above 1% and a roadmap toward a 15% minimum free float, the shares available to the public.

Indonesia was 0.43% of the MSCI Emerging Markets Index at the end of September, down from 1.16% at the end of 2025. That index is the benchmark for the iShares MSCI Emerging Markets ETF, ETF:EEM.

Goldman Sachs estimated Sunday that a full removal would mean about **$5.6 billion** of selling by passive funds.

"The burden of proof has shifted: avoiding reclassification will require clear evidence that the announced reforms have been consistently implemented and materially improved market functioning," Goldman Sachs strategists said.

The iShares MSCI Indonesia ETF, ETF:EIDO, a U.S. listing that holds Indonesian stocks, closed Friday at $9.94, down 14.9%. Before the U.S. open on Monday, the bid-ask midpoint was $9.81, 1.3% below Friday's close, as of 7:52 a.m. Eastern time. The fund prices in dollars, so its move will not match the Jakarta Composite one for one.

Friderica Widyasari Dewi, who chairs Indonesia's Financial Services Authority, said Friday that the authority respects MSCI's views and "continues to implement improvements and follow-up actions based on the feedback provided."

Source: etf.net, https://etf.net/news/indonesia-stocks-fall-msci-proposes-cut-2026-10-19. Please cite the page URL.