Indonesia to meet MSCI after $120B market sell-off

Indonesia will hold a follow-up meeting with global index provider MSCI this week to present progress on capital market reforms after recent warnings triggered a major market sell-off.

According to the Indonesia Stock Exchange (IDX), the meeting is expected to take place during the second week of February. Local media reports say it is scheduled for Wednesday, News.Az reports, citing Reuters.

Around $120 billion in market value has been wiped from Indonesia’s equity market since MSCI raised concerns late last month about transparency and ownership structures in Indonesian stocks.

Investor sentiment was further hit after Moody’s downgraded the outlook for Indonesia’s government and corporate bonds to negative, increasing fears of capital outflows from Southeast Asia’s largest economy.

Indonesian officials have already held an earlier virtual meeting with MSCI on Feb. 2, during which Jakarta presented several reform proposals. These include disclosing shareholders with at least 1% ownership, providing more detailed investor classifications, and doubling minimum free float share requirements.

The IDX said it plans to publish improved disclosure data on its website later this month. More detailed investor classification measures are expected by the end of March, alongside regulatory steps to increase minimum free float levels.

The market turmoil has also triggered leadership changes, with five senior officials from the stock exchange and financial regulator OJK resigning following the sell-off.

The pressure on Indonesia’s markets comes amid broader investor concerns over central bank independence and fiscal stability, as President Prabowo Subianto pushes to accelerate economic growth to 8% from around 5%.

Indonesia’s currency, the rupiah, recently fell to a record low of 16,985 per U.S. dollar after Prabowo nominated his nephew, Thomas Djiwandono, for a senior central bank position. The currency has since stabilized slightly but remains near historic lows.

Djiwandono is expected to be sworn in as deputy governor of Bank Indonesia later Monday. He previously served as vice finance minister.

News.Az 

By Aysel Mammadzada