Indonesia nears costly MSCI downgrade over wash trades and extreme rallies

· Finance · Indonesia

Stock trading schemes that helped enrich Indonesia's tycoons have put the country on the verge of a costly MSCI downgrade, Bloomberg reported. The practices cited include wash trades and rallies of as much as 5,000%. An MSCI reclassification would affect how global index-tracking funds allocate to Indonesian equities. The items do not specify the timing or the size of any resulting outflow.

Why it matters：An MSCI downgrade would change how index funds treat Indonesian equities, a warning to emerging markets that weak trading oversight can carry direct capital-market costs.

Key points

  • The cited practices include wash trades and rallies of up to 5,000%.
  • The schemes helped enrich Indonesian tycoons, according to Bloomberg.
  • A downgrade would affect index-tracking allocations to Indonesian stocks.

Sources (original reporting)

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