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View all search resultsIDX plunges after MSCI warning about RI stocks
The Indonesia Stock Exchange (IDX) temporarily halted trading on Wednesday after shares plunged on a warning from global index provider MSCI that it could downgrade Indonesian stocks to frontier-market status.
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The trading floor of the Indonesia Stock Exchange (IDX) in this undated photograph. (JP/Wienda Parwitasari)
T
he Indonesia Stock Exchange (IDX) temporarily halted trading on Wednesday after shares plunged on a warning from Morgan Stanley Capital International (MSCI) that it could downgrade Indonesian stocks to frontier-market status in the global indexes it compiles.
The bourse halted trading for 30 minutes after the IDX Composite index dropped by 8 percent to 8,261.79 points during the second trading session of the day, but local stock market benchmark pared some of the loss after trading resumed and closed the day at 8,320.56 points.
The one-day drop of 7.35 percent erased gains the Composite index had made since early November.
MSCI announced on Tuesday a temporary freeze on several Indonesian stock indexes with immediate effect due to what it deems inadequate transparency around listed Indonesian companies, meaning changes to the underlying stocks will not be reflected in its global benchmarks.
“While there have been minor enhancements to IDX’s float data feed, investors highlighted that fundamental investability issues persist due to ongoing opacity in shareholding structures and concerns about possible coordinated trading behavior that undermines proper price formation,” reads the announcement from MSCI.
Read also: IDX Composite index nosedives at open
“To address some of these concerns, more granular and reliable information on shareholding structures, possibly including high shareholding concentration monitoring, is required to support a robust assessment of free float and investability across Indonesian securities,” it added.
