The Jakarta Composite Index (JCI) reached an all-time high of just above 9,100 on Jan. 20. It then began to slide, falling to a little over 7,100 by March 27, exactly a month after the United States and Israel launched joint attacks on Iran. The decline continued, with the index touching 6,971 on April 7.

To understand this volatility, the sell-off should be divided into two distinct phases: the decline following MSCI’s late-January warning and the subsequent drop as conflicts in the Middle East escalated.

In late January, MSCI warned of structural weaknesses in the Indonesian market, particularly around transparency and trading practices. The warning was clear: Unless these issues were addressed, Indonesia risked being downgraded from "emerging market" to "frontier market" status.

None of these concerns was entirely new. They included weak ownership transparency, opaque free-float calculations and suspicions of coordinated trading that may have distorted prices.

Two features of the market stood out. First, while the domestic market index continued to rise for a time, the MSCI Indonesia index had begun to diverge. Second, foreign investors found it difficult to gain meaningful exposure to several large cap stocks whose prices had risen sharply. Both trends were at odds with the standards expected in major global exchanges.

Following the MSCI’s warning, several stocks that had surged from the second half of 2025 to early 2026 began to correct sharply. The broader index fell around 8.3 percent during this phase. Selling pressure on blue-chip banks such as BCA and Bank Mandiri remained relatively limited and foreign outflows were not yet especially large. Even so, market capitalization fell by roughly Rp 1.5 quadrillion (US$88 billion).