Jakarta. Indonesia’s benchmark Jakarta Composite Index (JCI) opened sharply lower on Wednesday, plunging 587 points, or 6.99%, to 8,393 in early trading, as investor sentiment was hit by concerns over index treatment following a warning from MSCI and continued foreign selling pressure.

The index briefly moved within a range of 8,349 to 8,478. Trading activity was brisk in the opening minutes, with volume reaching 10.01 billion shares and turnover totaling Rp 7.11 trillion ($424.59 million) across more than 591,000 transactions. Market breadth was deeply negative, with 625 stocks declining, 36 advancing, and 41 unchanged.

CGS International Sekuritas Indonesia said the outlook for the JCI remains clouded by persistent foreign investor outflows, compounded by MSCI’s latest decision to freeze positive adjustments for Indonesian stocks, a move expected to further dampen market sentiment.

The sell-off intensified after MSCI issued a strong warning on Indonesia’s stock market, announcing a temporary freeze on index treatment for Indonesian stocks following concerns over free float and market accessibility. The decision followed the release of MSCI’s consultation results on the assessment of free float data for Indonesian-listed companies on Tuesday.

BRI Danareksa Sekuritas (BRIDS), commenting on the announcement, said MSCI concluded that ownership data for Indonesian equities remains insufficiently transparent. The firm flagged concerns over unclear ownership structures, high ownership concentration, and the potential for coordinated trading practices that could disrupt fair price formation. “Despite improvements in data provided by the Indonesia Stock Exchange, core investability issues are still considered unresolved,” BRIDS said in its review of the MSCI decision.

As a temporary measure, MSCI has frozen all positive changes for Indonesian stocks, including increases in index weightings and free float factors, the addition of new Indonesian stocks to MSCI indices, and any index upgrades, such as from small cap to standard. The freeze will also apply to the February 2026 index review. “There is no positive catalyst from MSCI in the near term, although there has been no downgrade in Indonesia’s weighting for now,” BRIDS said.

However, the firm warned that if ownership transparency does not improve by May 2026 and no clear monitoring system for ownership concentration is established, MSCI could cut Indonesia’s weighting in the MSCI Emerging Markets index or even downgrade Indonesia’s status from Emerging Market to Frontier Market. “This is a major risk, as it could trigger structural foreign outflows rather than just temporary selling pressure,” BRIDS said.

Against this backdrop, Pilarmas Investindo Sekuritas noted that global sentiment was supported by the long-awaited free trade agreement between India and the European Union, concluded after nearly two decades of negotiations. European Commission President Ursula von der Leyen said the deal shows that “cooperation is the best answer to global challenges,” adding that it would further integrate supply chains and strengthen joint manufacturing capacity. She also emphasized that “by combining these strengths (EU’s technology and India’s skills), we reduce strategic dependencies at a time when trade is increasingly weaponized.”

Overnight, Wall Street closed mixed, with the S&P 500 rising 0.4% to edge past its previous all-time high, while the Dow Jones Industrial Average fell 408 points, or 0.8%. The Nasdaq Composite climbed 0.9%, reflecting sharp divergences between sector winners and losers.

Investors are now turning their attention to the Federal Reserve’s policy announcement later on Wednesday, with expectations that the central bank will hold its benchmark interest rate steady. Inflation remains above the Fed’s 2% target, though traders still anticipate rate cuts later this year.

In Asia, markets were mixed. Japan’s Nikkei fell 0.58% to 53,023, while South Korea’s Kospi surged 1.1% to 5,145. Hong Kong’s Hang Seng rose 0.72% to 27,325, and China’s Shanghai Composite advanced 0.26% to 4,150.

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