The Composite Stock Price Index (IHSG) plunged over 7 percent at the opening of trading on Thursday (January 29, 2026), triggering a trading halt by the Indonesia Stock Exchange (BEI). The drop was triggered by MSCI's announcement freezing the rebalancing of Indonesia's stock index due to free float transparency issues. The risk of downgrading from emerging to frontier market status looms larger.
On Wednesday (January 28, 2026), MSCI announced a freeze on adding Indonesian stocks to the February 2026 index rebalancing, highlighting limitations in free float transparency—the portion of shares truly owned by the public and actively traded. This triggered a foreign fund outflow of Rp6.17 trillion that day, causing the IHSG to close down 7.35 percent at 8,320.56.
The next day, the IHSG opened at 8,027.83 and immediately faced pressure, plunging 7.09 percent or 590.23 points to 7,730.33 by 9:20 AM WIB, with transaction value at Rp9.27 trillion and 641 stocks declining. The BEI imposed a 30-minute trading halt at 9:26 AM when the IHSG hit an 8 percent drop to 7,654.66. "This action was taken due to the IHSG decline reaching 8 percent," said BEI Corporate Secretary Kautsar Primadi Nurahmad.
Ajaib Sekuritas assessed that the risk of Indonesia's market status dropping from emerging to frontier market is rising if free float issues are not resolved soon, potentially triggering global fund outflows due to limited index investment mandates. The IHSG year-to-date weakened 3.77 percent, the lowest in ASEAN. Ajaib Sekuritas Financial Expert Ratih Mustikoningsih stated, "The IHSG corrected amid foreign investor fund outflows reaching Rp6.17 trillion on January 28 trading."
Amid volatility, PT Bank Central Asia Tbk (BCA) announced a share buyback plan up to Rp5 trillion post-Annual General Meeting on March 12, 2026, to support market stability. "This share buyback is carried out to contribute to supporting the stability of the Indonesian capital market," said BCA EVP Hera F. Haryn.
The BEI responded by preparing a new free float formula for discussions with MSCI before May 2026. BEI President Director Iman Rachman hopes the process runs smoothly, while Finance Minister Purbaya Yudhi Sadewa called the market reaction excessive and merely a temporary shock, with fixes to be made on time.
