Indonesia's MSCI crisis driven by wash trades and 5,000% rallies

· Politics · Indonesia

Stock trading schemes that helped enrich Indonesia's tycoons have put the country on the verge of a costly MSCI downgrade, according to a report that points to wash trades and rallies of as much as 5,000%. The practices raise concerns about market integrity. An MSCI downgrade could trigger outflows from index-tracking funds. Indonesian political manoeuvres are also hindering market reforms amid downgrade threats.

Why it matters：A downgrade could prompt index funds to sell Indonesian stocks and raise the country's borrowing costs.

Key points

  • Report cites wash trades and 5,000% rallies
  • Indonesia is on the verge of an MSCI downgrade
  • Index funds could sell Indonesian stocks

Sources (original reporting)

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