IHSG Plunges as MSCI Freezes Indonesia Index Rebalancing

RRI.CO.ID, Jakarta - The Indonesia Stock Exchange (IDX) Composite Index (IHSG) plunged sharply on Wednesday morning, January 28, 2026, opening down 6.66 percent at 8,382.48. 

The sell-off followed an announcement by Morgan Stanley Capital International (MSCI) to temporarily freeze the rebalancing process for Indonesian equities within its global indices. The MSCI decision stems from a global consultation on the “free float” assessment of Indonesian stocks. 

While some investors welcomed the use of KSEI Monthly Ownership Reports as a new reference, many expressed concerns over the reliability of shareholder classifications. “This MSCI decision has the potential to put downward pressure on the JCI, particularly in the short to medium term. The freeze on increasing the weighting of Indonesian stocks means passive capital flows from global investors are being curbed,” said Hendra Wardana, Founder of Stocknow.id, as quoted by Antara. 

He noted that passive funds and ETFs tracking MSCI indices are key drivers of demand for Indonesia’s large-cap stocks.

MSCI stated that despite minor improvements by the IDX, fundamental issues regarding market investability remain unresolved. Global investors pointed to low transparency in ownership structures, making it difficult to determine the true public float of many listed companies. 

Concerns were also raised about coordinated transactions, with fears of price manipulation through synchronized trades seen as a threat to fair price formation and healthy market volatility.

As a result, MSCI has frozen all increases to Foreign Inclusion Factors and Number of Shares, including the upcoming February 2026 review and any corporate actions. No new Indonesian stocks will be added to the MSCI Investable Market Indexes (IMI) for now. The policy aims to reduce excessive index turnover while giving Indonesian authorities time to improve transparency.

Regional and global markets showed mixed but relatively stable performances. In Asia, Japan’s Nikkei fell 0.55 percent, while Hong Kong’s Hang Seng gained 1.13 percent. On Wall Street, major indices moved in different directions on Tuesday, with the Nasdaq rising 0.88 percent, the S&P 500 up 0.41 percent, and the Dow Jones down 0.83 percent. ***