Indonesian Stocks Sink 8% at Open on MSCI Downgrade Risk

Indonesian shares rose 41 points, or 0.8%, to 5,088 in early trade on Monday, extending gains for a fourth session amid stronger U.S. stock futures ahead of key inflation data and major AI company earnings this week. Sentiment was also lifted by fresh data showing October forex reserves hit a seven-month high. Meanwhile, Q3 GDP growth accelerated to 5.47% yoy, beating expectations on resilient private consumption and solid manufacturing. However, gains were limited by caution ahead of MSCI’s November index review, with its final decision on Indonesia’s market status expected by June 2027 at the latest. Political tensions also remained elevated following a wiretapping scandal involving several senior police officers, with students and other groups expected to stage protests later this week. All sectors gained, led by energy, cyclicals, basic materials, and infrastructure. Among early standouts were Solusi Sinergi Digital (7.6%), Telkom Indonesia (4.0%), and Aneka Tambang (3.0%).

Indonesia’s IDX Composite plunged 91 points, or 1.8%, to 4,939 in Friday morning trade, reversing gains from the prior two sessions after a tech rout on Wall Street overnight amid concerns about the profitability of heavy AI investment after the U.S. midterms. Local markets are heading into a second straight weekly fall, down 2.4% so far, and hovering near a six-year low, reflecting fiscal concerns over higher oil prices and the Prabowo administration’s hefty spending commitments, continued foreign capital outflows, and rupiah volatility. All major sectors slid, led by basic materials, infrastructure, energy, and cyclicals. Japfa Comfeed dipped 6.9%, followed by Barito Pacific (-6.6%) and Darma Henwa (-6.1%). Still, losses were partly limited by stronger-than-expected Q3 GDP growth, reinforcing optimism that the 2026 growth target of around 5.4% remains within reach. Meanwhile, authorities enacted sanctions over alleged stock market violations after MSCI warned of a possible downgrade.

Indonesian shares surged 114 points, or 2.3%, to 5,036 in early trading Thursday, extending prior gains as bargain hunters set in after markets fell to a six-year low earlier this week. An overnight rally on Wall Street also boosted sentiment amid sharply lower oil prices and reduced uncertainty following Democrats’ U.S. midterm wins. Locally, sentiment improved after regulators announced new sanctions for alleged stock market violations as part of reforms following MSCI’s warning of a potential market downgrade. All major sectors strengthened, led by basic materials, industrials, and non-cyclicals. Notable gainers included Merdeka Copper Gold (12%), Archi Indonesia (10.3%), and Telkom (6.6%). However, the rally was capped by caution ahead of Q3 GDP data due later today, with growth expected to slow further amid mounting economic headwinds. Meanwhile, the deployment of 20,000 troops across Jakarta following the arrest of three senior police officers added to political tensions.