KUALA LUMPUR, Feb 11 (Bernama) -- Bursa Malaysia ended higher today as buying on selected blue chips continued, said a brokerage. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 8.85 points or 0.51 per cent to 1,756.39 from Tuesday’s close of 1,747.54. The barometer index opened 3.69 points higher at 1,751.23 before moving as low as 1,745.51 in early trade to as high as 1,757.15 during the mid-afternoon session. Market breadth was positive with gainers leading losers 575 to 474, while 549 counters were unchanged, 1,087 untraded and 11 suspended. Turnover expanded to 2.55 billion units valued at RM3.06 billion from yesterday’s 2.19 billion units valued at RM2.35 billion.
Quick Summary
Indonesia’s stock market suffered its worst two-day selloff in nearly 30 years after an MSCI downgrade warning
Jakarta Composite Index (JCI) plunged up to 10%, triggering circuit breakers
Regulators pledged reforms, including higher free-float requirements and possible market support
Investor confidence remains fragile, with risks spilling into currency and bond markets
What Happened
Indonesia’s benchmark Jakarta Composite Index (JCI) suffered a historic selloff after MSCI Inc. warned it could downgrade the country’s market status.
The index:
Fell as much as 10%, triggering circuit breakers for a second straight day
Marked the worst two-day rout since the 1998 Asian Financial Crisis
Closed down 1.1% after a late rebound following regulatory intervention
The selloff came just one week after the market hit a record high.
Why Markets Panicked
The MSCI warning highlighted:
Low free float among Indonesian listed companies
Limited transparency and liquidity
Concerns that large stocks are tightly controlled by a small group of wealthy owners, increasing manipulation risk
Indonesia has the lowest average free float in Asia-Pacific at 7.5%, compared with:
25% in Hong Kong and India
15% in Thailand
Regulators Step In
To calm markets, Indonesian authorities announced:
Minimum free-float requirements will be doubled starting next month
The sovereign wealth fund Danantara may step in to support markets
Officials now have until May, when MSCI reassesses Indonesia’s market accessibility, to prove meaningful progress.
Broader Market Impact
Rupiah fell as much as 0.5%, its biggest drop since October
Bond yields edged higher, raising concerns over monetary policy constraints
Foreign investors dumped shares aggressively, with:
$371 million sold in a single day
First weekly foreign equity outflow in 16 weeks
What Investors Are Worried About
According to market participants, risks now extend beyond equities:
Medium-term policy direction remains unclear
Execution risk around promised reforms
Potential impact on economic growth and fiscal stability
Goldman Sachs and UBS both cut ratings, with Goldman warning that up to US$13 billion in outflows could occur in a worst-case scenario.
Why This Is a Big Deal
If MSCI downgrades Indonesia:
The country could lose emerging market status
Passive funds tracking MSCI indexes may be forced to sell
Indonesia risks following Pakistan, which lost EM status in 2021
Bottom Line
Indonesia’s market shock is a wake-up call.
The crash exposed long-standing structural weaknesses — especially low free float and poor transparency. While regulators have promised reform, investors are waiting for action, not words.
Whether Indonesia stabilises — or faces a damaging MSCI downgrade — now depends on how fast and how credibly reforms are delivered.
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