Indonesian stocks fall 6% after last week’s dramatic shake-up, US$80 billion rout

Published Mon, Feb 2, 2026 · 11:07 AM — Updated Mon, Feb 2, 2026 · 05:04 PM

[SINGAPORE] Indonesian stocks slid on Monday (Feb 2), weighed down by a sell-off in commodities, after a tumultuous week during which a warning from MSCI over transparency concerns triggered an US$80 billion market rout and the country’s top financial regulators resigned.

The benchmark Jakarta Composite Index fell about 6 per cent after sliding nearly 7 per cent last week, its steepest drop in a year, as a sharp decline in precious metals hurt investor sentiment that was already on eggshells. Other Asian markets were also lower.

“Today’s move reflects a broader global equity sell-off rather than anything Indonesia-specific,” said Mohit Mirpuri, fund manager at SGMC Capital in Singapore.

Indonesian regulators were set for an online meeting with MSCI on Monday afternoon, according to CNN Indonesia, to discuss the index provider’s requests for more transparency on ownership data and free-float management of shares.

MSCI did not immediately respond to a request for comment.

“It’s clearly all-hands-on-deck and we see strong intent from policymakers to find a workable solution,” said SGMC’s Mirpuri, who expects markets to remain choppy in the near term.

Indonesia’s Financial Services Authority late on Friday said its chief had quit along with three senior officials, including his deputy and the head of capital markets. Indonesia Stock Exchange chief Iman Rachman also resigned on Friday.

The departures came after MSCI flagged concerns about ownership and trading transparency in Indonesian stocks on Wednesday, warning that the market could be downgraded to “frontier” status if it did not resolve the issues by May.

Jeffrosenberg Lim, head of research at Maybank Sekuritas, said market participants might react to the resignations with “uncertainty and questions.”

“The speed at which market optimism returns will depend on the government’s ability to appoint credible leadership and to outline a clear, comprehensive reform roadmap for a healthier capital market,” Lim said.

Nomura on Sunday became the latest investment bank to lower its rating to “neutral” from “overweight” on Indonesian equities after similar moves by UBS and Goldman Sachs last week.

“While a downgrade to frontier market is not our base case, the non-zero probability of such an outcome introduces significant risk that we believe most institutional investors cannot ignore which thus becomes an overhang on the market,” Nomura strategist Chetan Seth said in a note.

Fiscal concerns rattle global investors

Global investors have been rushing for the exits in Indonesia due to rising concerns about President Prabowo Subianto widening the fiscal deficit and expanding the state’s involvement in financial markets.

Investors are also worried about the central bank’s independence after Prabowo’s nephew, Thomas Djiwandono, became a Bank Indonesia deputy governor in January.

Speaking to reporters after his appointment last week, Thomas said he would maintain Bank Indonesia’s independence.

“I would like to reiterate my commitment to maintain the central bank’s independence … aligning fiscal and monetary policies,” he said.

The Indonesian rupiah has been stuck near a record low of 16,985 per US dollar, which it touched in January. It was last at 16,795.

Daniel Tan, portfolio manager at Grasshopper Asset Management, said the recent market reaction does not feel overdone and he expects uncertainty to continue until May, when MSCI is due to reassess Indonesia’s market accessibility.

“If investors have no exposure, they should adopt a wait-and-see approach before getting involved,” he said.

Foreigners have sold a net of around US$736 million worth of shares since Wednesday, according to exchange data. They sold US$1 billion worth of shares in all of 2025.

On Saturday, Indonesia’s financial regulator named Friderica Widyasari Dewi as its interim chief and Hasan Fawzi as its executive chief for capital markets, a move that analysts said could help soothe investor nerves.

Jeffrey Hendrik, IDX’s director of business development, has been named interim chief of the exchange, CNN Indonesia reported on Monday. REUTERS