After Friday’s MSCI Announcement, IDX Seeks Clarification This Afternoon
The Indonesia Stock Exchange (IDX) will hold an online meeting with global stock-index provider Morgan Stanley Capital International (MSCI) on Monday (19 October). Scheduled for 3.30pm WIB, the meeting aims to seek clarification about MSCI’s decision to place Indonesia’s capital market under consultation.
IDX President Director Jeffrey Hendrik said the meeting followed MSCI’s announcement on Friday morning (16 October), Indonesia time. The announcement was considered unexpected by the IDX, the Financial Services Authority (OJK), MSCI participants and global investors.
“We will have an online meeting with MSCI this afternoon. We requested a meeting as soon as possible. I will provide an update after it,” Jeffrey told reporters at the IDX media room in Jakarta on Monday.
Jeffrey stressed that the IDX and OJK had not previously known about the planned announcement. He said MSCI’s decision had come unexpectedly.
Most MSCI participants and global investors who had been in contact with the IDX had also not anticipated the decision.
Meanwhile, to ease panic and prevent investors from making decisions amid uncertainty, the IDX lowered the lower auto-rejection (ARB) limit from 15% to 7%. The policy automatically limits share-price declines to the stipulated threshold.
Jeffrey acknowledged that the measure was unusual. However, he said it was intended to give investors time to assess new information before deciding on their investments.
“We will review this policy, but based on our review from this morning to midday, it has been quite effective in easing panic,” he said.
Jeffrey said the Jakarta Composite Index (JCI) was down about 5% by the close of Monday’s first trading session (19 October). The decline had therefore not reached the 7% ARB limit.
The IDX hopes investors will assess developments carefully and continue to consider companies’ fundamentals before making investment decisions.
Jeffrey added that the IDX had been monitoring the situation from Friday through Sunday. During that period, it also held discussions with various parties and listened to feedback from market participants.