Indonesia's stock market just crashed nearly 15% in two trading days, its worst rout since the 1998 Asian financial crisis

The Jakarta Composite plunged 11.57% on Friday to 5,185.11, its biggest one day drop since January 1998 and worse than any single day of the 2008 financial crisis, per Refinitiv data via CNBC Indonesia. Trading was halted for 30 minutes after an 8% drop at the open

It fell another 3.64% on Monday to 4,996.61, closing below 5,000 at its lowest level since 2020. All 11 sectors finished in the red

The trigger was index provider $MSCI(MSCI.US), which said it is considering downgrading Indonesia from emerging market straight to "standalone" status over investability concerns, going well beyond the frontier downgrade it flagged in January. A final decision is due by June 2027

$Goldman Sachs(GS.US) estimates a full removal from MSCI's emerging market indexes could force about $5.6B in passive fund outflows, roughly 18 days of average trading volume, with another $2.7B at risk if FTSE Russell follows

The damage was already building. The MSCI Indonesia Index is down 47% this year, foreigners have pulled a net $5.1B from Indonesian stocks in 2026, on pace for a record annual outflow per Bloomberg, and the value of foreign holdings has nearly halved to about $130B from $250B

Regulators are scrambling. The exchange cut the daily limit down for individual stocks to 7% from 15% through year end, and the 10 year bond yield jumped to a four month high

This is what index power looks like in 2026. Passive money does not follow GDP growth, it follows the benchmark, and once $MSCI(MSCI.US) questions whether a market is investable, the selling feeds on itself. Indonesia now trades near 7.3 times forward earnings, the lowest since the financial crisis, but the only number that matters before June is whether Jakarta can fix governance fast enough to stay in the index

Source: StockMarket.News