Indonesia Faces Potential MSCI Index Downgrade Amid Market Governance Concerns

MSCI Inc. warned it is considering removing Indonesia from its global indexes, threatening the Southeast Asian nation with a downgrade to standalone status.

The benchmark Jakarta Composite Index tumbled nearly 12% following the announcement, extending losses and placing pressure on the rupiah and sovereign bonds.

MSCI highlighted weak governance and corruption as key vulnerabilities, urging regulatory improvements in market transparency and surveillance ahead of a June decision.