JAKARTA – The Jakarta Composite Index (IHSG) plunged by more than 3% during Monday’s opening session (May 18, 2026), continuing a sluggish performance triggered by the decision of global index provider MSCI Inc. to remove 18 Indonesian stocks from its indices.
Imam Gunadi, an Equity Analyst at Indo Premier Sekuritas, explained that market focus for the May 18—22, 2026 trading period remains heavily centered on the upcoming MSCI rebalancing, which becomes effective on May 29, 2026. Last week, following the initial announcement of the rebalancing, the IHSG closed lower at 6,723.32 as global investors began repositioning their portfolios.
This proactive adjustment by foreign investors has led to a significant wave of aggressive passive outflows from the Indonesian capital market. According to Gunadi, the exclusion of major stocks such as AMMN, BREN, TPIA, DSSA, and CUAN from the MSCI Global Standard Index has become the primary catalyst for the heightened selling pressure currently impacting domestic markets.
Market sentiment is further compounded by a broader risk-off approach among global investors. Expectations for a Federal Reserve interest rate cut have cooled following higher-than-expected US inflation data, with some market participants even anticipating further rate hikes by year-end. Additionally, persistent geopolitical tensions involving Iran continue to drive oil prices above US$105 per barrel.
“A combination of a strong dollar, high oil prices, and foreign outflows is creating layered pressure on the domestic market,” Gunadi noted in an official statement.
Meanwhile, the Kiwoom Sekuritas Research Team acknowledged that while the results of the May 2026 MSCI rebalancing appear negative for Indonesia, the selling pressure is not evenly distributed; it remains concentrated on specific equities. Kiwoom identified PT Dian Swastatika Sentosa Tbk. (DSSA) and PT Barito Renewables Energy Tbk. (BREN) as the primary drivers of this volatility.
Kiwoom further noted that the year-to-date (YtD) foreign sell-off of Rp49 trillion does not solely reflect the MSCI impact. Much of the pressure had already been building as global investors began their positioning well ahead of the May 29 effective date. Beyond the MSCI factor, the market remains shadowed by external sentiments, including the weakening of the rupiah against the US dollar (breaching the Rp17,500 level), rising US Treasury yields, and persistent global economic uncertainty.
However, Kiwoom pointed out that there are silver linings often overlooked by the market, such as Indonesia maintaining its status as an Emerging Market rather than being downgraded to a Frontier Market. The research team believes the market may be hyper-focused on the headline of 18 stocks being removed, failing to realize that much of the pressure has already been absorbed gradually over the past few months.
Following the long holiday, the IHSG opened in the red on Monday morning (May 18, 2026). As of 09:32 WIB, data from RTI Infokom showed the index had tumbled 3.14% to 6,512.28, trading within a range of 6,509.88 to 6,631.28. Market breadth was significantly negative, with 572 stocks declining, 96 advancing, and 69 remaining stagnant. The total market capitalization on the Indonesia Stock Exchange reached Rp11,427.62 trillion.
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Summary
The Jakarta Composite Index (IHSG) experienced a sharp decline of over 3% following the announcement that MSCI will remove 18 Indonesian stocks, including AMMN, BREN, and TPIA, from its indices effective May 29, 2026. This rebalancing has triggered aggressive passive outflows as global investors reposition their portfolios ahead of the deadline. Market volatility is further exacerbated by the concentration of selling pressure on specific high-profile equities.
Beyond the MSCI rebalancing, the domestic market is under pressure from a strengthening US dollar, which has pushed the rupiah past the Rp17,500 level, and rising US Treasury yields. Global sentiment remains cautious due to persistent geopolitical tensions and inflation concerns that have delayed expectations for Federal Reserve rate cuts. Despite these headwinds, analysts note that Indonesia retains its Emerging Market status and much of the selling pressure may have already been absorbed by the market.
