Jakarta. Indonesian stocks plunged 10.76% by midday Friday, extending losses after trading resumed following a temporary halt triggered by a sharp sell-off over MSCI’s proposal to downgrade Indonesia’s market classification from Emerging Market to Standalone Market.

Jakarta Composite Index (JCI) fell 630 points to 5,233 at midday. The benchmark had earlier slumped 650.3 points, or 11.16%, to 5,206 after trading resumed, as investors reacted to concerns over the potential reclassification.

Trading volume reached 38.69 billion shares, with turnover totaling Rp 17.33 trillion ($960.37 million) and transaction frequency exceeding 1.35 million. Only 14 stocks advanced, while 771 declined and three remained unchanged.

The Indonesia Stock Exchange (IDX) halted trading at 8:58 a.m. Jakarta time after the JCI’s decline reached 8%. Trading resumed at 9:28 a.m., with the exchange maintaining its regular trading schedule.

The sell-off followed MSCI’s announcement that it had launched a consultation on a proposal to reclassify Indonesia from an Emerging Market to a Standalone Market.

MSCI said it would announce its final decision on the proposal no later than the end of June 2027. During the consultation period, the index provider may also issue updates based on feedback from market participants.

Reza Priyambada, an analyst and director at Reliance Sekuritas, said news of the proposed reclassification had triggered a negative reaction in Indonesia’s stock market.

International institutions’ assessments can influence foreign investors’ perceptions of Indonesia’s investment appeal, Reza said, even as the government and market participants maintain that corporate and domestic economic fundamentals remain sound.

“Although the government and market participants consider corporate and domestic economic fundamentals to be sound, negative perceptions from international institutions could still shake investor confidence,” Reza said.

He added that investors could interpret a shift from Emerging Market to Standalone Market status as a downgrade signaling that Indonesia had become less attractive as an investment destination.

Reza said capital market authorities, particularly the IDX and the Financial Services Authority (OJK), should address fundamental issues that have drawn scrutiny from global investors.

“Market reforms should not focus solely on market development and the enforcement of sanctions. Authorities also need to ensure a level playing field in market mechanisms and address other issues that shape international investors’ assessments of the quality of Indonesia’s capital market,” he said.

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