Jakarta. Indonesian stocks closed lower on Thursday as fears of a potential MSCI downgrade continued to weigh on sentiment, with the Jakarta Composite Index (JCI) ending down 1.06% at 8,232 after a volatile session that earlier triggered a trading halt.

Earlier in the day, trading was halted after the index fell more than 8%, extending a second straight session of sell-offs driven by MSCI-related concerns.

Trading activity remained heavy, with 98.64 billion shares changing hands for a total value of Rp 67.62 trillion ($4.03 billion) across more than 4.9 million transactions. Market breadth stayed weak, with 214 gainers, 521 decliners, and 73 unchanged stocks.

Despite the overall decline, several small-cap stocks posted sharp gains. KIOS surged 26.23%, AGAR jumped 24.46%, ELIT climbed 23.02%, and ARGO advanced 19.91%.

Losses were led by GOLF, which fell 15%, followed by BUMI down 14.97%, VKTR sliding 14.93%, and EXCL dropping 14.92%.

Pressure on Indonesian stocks intensified after MSCI flagged the risk of downgrading Indonesia from emerging market to frontier market status if transparency requirements on free-float data are not met by May 2026. Indonesia Stock Exchange (IDX) said the risk was real and required immediate improvements in ownership data governance.

IDX President Director Iman Rachman said MSCI viewed the availability and transparency of Indonesia’s free-float data as falling short of its methodology standards. Failure to meet the deadline could see Indonesia reclassified into the frontier market group alongside Vietnam and the Philippines, from its current emerging market status, where it sits alongside Malaysia.

Iman added that IDX, together with the Financial Services Authority (OJK) and the Indonesian Central Securities Depository (KSEI), has held intensive discussions with MSCI to convey objections and propose alignment options.

Pilarmas Investindo Sekuritas said the JCI’s sharp sell-off reflected continued market pressure following MSCI’s ultimatum. The brokerage noted that MSCI’s decision to temporarily freeze index rebalancing for Indonesian stocks, citing transparency concerns, had amplified downgrade risks. “IHSG even triggered a trading halt to curb extreme volatility,” Pilarmas said in its Thursday research note.

Pilarmas also pointed to spillover effects from the MSCI issue, noting that Goldman Sachs had downgraded Indonesian equities to underweight, weighing on investor confidence and deepening negative sentiment in domestic financial markets.

Regionally, Asian stock markets ended mixed. The Federal Reserve kept its benchmark interest rate unchanged at 3.50%–3.75%, in line with expectations, citing resilient economic activity and early signs of labor market stabilization, while acknowledging elevated inflation and uncertain prospects. Fed Chair Jerome Powell said rates were “in a good place” for now, without signaling when cuts might begin.

Geopolitical risks also remained elevated after warnings from the United States over possible military action against Iran, adding to investor caution.

In Asia, Japan’s Nikkei 225 edged up less than 0.1% to 53,375, South Korea’s Kospi jumped 1.0% to 5,221 on strong chip earnings, Hong Kong’s Hang Seng gained 0.3% to 27,917, and China’s Shanghai Composite rose 0.2% to 4,157.

On Wall Street overnight, the reaction to the Fed’s decision was muted. The S&P 500 slipped by less than one point to 6,978, the Dow Jones Industrial Average added 12 points to 49,015, and the Nasdaq Composite rose 0.2% to 23,857.