Indonesian stocks drop 11 pct amid threat of MSCI index removal

JAKARTA, Oct. 16 (Xinhua) -- Indonesia's benchmark stock index tumbled over 11 percent on Friday and the rupiah weakened sharply after global index provider MSCI announced a proposal to reclassify the market from "emerging" to "standalone" status.

Photo taken on Jan. 23, 2022 shows the cityscape in Jakarta, Indonesia. (Photo: Xinhua)

The Jakarta Composite Index plunged 8 percent at Friday's opening, triggering a 30-minute trading halt. As trading resumed, selling pressure intensified, pushing the index down as much as 11 percent, heading for its steepest single-day slump since January 1998.

The severe market sell-off followed MSCI's statement that maintaining Indonesia's emerging market status might be "no longer appropriate." A reclassification to "standalone" status would exclude Indonesian stocks from global indexes tracked by billions of dollars in passive investment, forcing funds that follow or are ranked against the indexes to sell.

However, MSCI has not made a final decision on Indonesia's status.

In the foreign exchange market, the Indonesian rupiah dropped to 18,070 per U.S. dollar, hovering near its lowest levels since early August and approaching a historical low of 18,190.