Jakarta. Indonesian stocks plunged 5.05% to 4,923 at Monday’s midday break as concerns over MSCI’s assessment of the country’s stock market added to selling pressure, while the Indonesia Stock Exchange’s (IDX) tighter 7% daily decline limit raised the risk of investors becoming trapped in sell-order queues.

Jakarta Composite Index (JCI) fell 262 points during the morning session, trading between 4,907 and 4,974. According to IDX data, investors traded 16.89 billion shares worth Rp 10.03 trillion ($555.7 million) across 872,556 transactions.

Despite the broad sell-off, five stocks gained more than 20%, placing them among the session’s top gainers. Three hit the upper auto-rejection limit (ARA), which caps daily share-price increases.

Only 42 stocks advanced, while 744 declined and 13 remained unchanged. The LQ45 index, which tracks 45 of the exchange’s most liquid stocks, fell 1.17%.

All stock sectors weakened by the midday break. Basic materials led losses at 6.37%, followed by energy at 5.48%, consumer non-cyclicals at 4.93%, industrials at 4.63% and consumer cyclicals at 4.52%.

The sell-off comes amid concerns over MSCI’s assessment of Indonesia’s stock market, including issues surrounding market transparency and investability. The IDX’s decision to cut the lower auto-rejection limit (ARB) from 15% to 7% has also raised concerns that investors could face long queues of sell orders and struggle to exit their positions.

Capital market analyst Hendra Wardana warned that limiting daily share-price declines is not a fundamental solution to the market’s problems. The underlying challenge, he said, is waning investor confidence in the transparency, governance and regulatory certainty of Indonesia’s capital market.

The 7% limit gives investors more time to assess information before making decisions. However, when selling pressure is not matched by buying demand, trades may fail to execute even after a stock hits its daily price floor.

“As a result, investors can become trapped in long queues of sell orders. Selling pressure could also carry over into the next trading session, prolonging the price adjustment process,” Hendra said in Jakarta on Monday.

He explained that ARB limits how far an individual stock can fall in a single trading session, while a trading halt temporarily suspends trading across the entire market when the JCI reaches a predetermined decline threshold.

Cutting ARB to 7% mechanically reduces the likelihood of a market-wide trading halt triggered by falling share prices during regular trading. The JCI’s trading-halt threshold is a decline of more than 8%, while constituent stocks generally cannot fall more than 7% in a single session under the revised limit.

However, Hendra stressed that the possibility of a trading halt does not disappear entirely. Index calculation mechanisms, corporate actions and technical trading rules must still be taken into account.

He also cautioned against interpreting price stability under tighter trading limits as a sign that market confidence has recovered. Pressure on the JCI also reflects concerns over share-ownership transparency, corporate governance, foreign fund flows and rupiah depreciation, alongside questions about Indonesia’s standing in global market classifications.

“In a situation where foreign investors are selling heavily, the ARB limit only provides temporary protection against the speed of price declines,” said Hendra, founder of Republik Investor.

Hendra described the 7% ARB limit as an emergency measure to contain volatility rather than a fundamental fix for the capital market’s problems. The IDX and the Financial Services Authority (OJK), he said, should evaluate the policy based on market liquidity, price discovery, sell-order queues and investors’ ability to transact under fair conditions.

Restoring investor confidence requires more fundamental reforms, including greater transparency in share ownership, consistent law enforcement, improved disclosure and greater regulatory certainty, he added.

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