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News Topical, Digital Desk : The massive drop in Indonesia's stock market has captured the attention of investors worldwide. In just two days, the market lost nearly $84 billion (approximately Rs. 764,400 crore in Indian rupees). Following this massive loss, Indonesian Stock Exchange CEO Iman Rachman resigned. This market turmoil followed a potential downgrade warning from MSCI, further fueling investor concerns.
What happened in Indonesia's capital market over the past two days has raised questions about both its market structure and trust.
Following a sharp decline in the stock market, Indonesian Stock Exchange CEO Iman Rachman resigned on Friday. This decline wiped out approximately $84 billion in market value from Indonesia's stock market. A statement issued by the Indonesian Stock Exchange (IDX) stated that Iman Rachman resigned, taking responsibility for the recent market situation. However, the exchange did not provide further details. In a press conference following his resignation, Rachman said he hoped his decision would be beneficial for the capital market. He also stated that his departure would lead to further improvements in Indonesia's capital market. According to Rachman, the market opened on a positive note on Friday and he expects further improvements in the coming days. However, investor concerns appear far from being fully addressed. MSCI's warning is believed to be at the root of this development. On Tuesday, MSCI warned Indonesia that the country should
In its commentary, MSCI raised serious questions about trading transparency and shareholding structure. MSCI stated that investors have repeatedly raised concerns about investment infrastructure in Indonesia's stock market. Concerns have been raised,
in particular, about opacity in shareholding patterns and potential coordinated trading. According to MSCI, such activities undermine accurate price discovery, thereby undermining investor confidence.
A look at market data can easily illustrate the severity of the situation. The Jakarta Composite Index fell 7.35% on Wednesday.
It then fell another 1.06% on Thursday, dealing investors a significant blow in just two trading sessions. However, the market saw some relief on Friday, closing up 1.18%.
Earlier on Wednesday, the Indonesian Stock Exchange responded to MSCI's comments, stating that it was taking the feedback seriously. The exchange also reiterated its commitment to increasing the weighting of Indonesian stocks in MSCI indices. According to IDX, this will be achieved by continuously improving market data transparency and providing investors with more accurate and reliable information.
This entire development has made it clear that not only growth, but also transparency and governance are equally important for a country's stock market.
The opinions of global index providers like MSCI not only determine fund flows but also directly impact the market's credibility. Therefore, investors will continue to closely monitor Indonesia's market and regulatory actions in the coming days.
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