Indonesian Economy
IHSG plunges sharply due to MSCI sentiment on free float
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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.
The Composite Stock Price Index (IHSG) opened up 76 points or 0.93 percent at 8,308 on Friday, January 30, 2026, following a sharp drop the previous day due to concerns over the MSCI announcement. Analysts predict ongoing fluctuations though the index holds above key support levels. Financial authorities responded with new policies to enhance market transparency.
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The rupiah exchange rate weakened toward Rp 17,000 per US dollar on January 21, 2026, driven by global and domestic pressures. Economist Josua Pardede stressed the need for fiscal policy certainty to restore market confidence. Meanwhile, the IHSG opened lower amid rising external risks.