Prabowo says Indonesia will not be cowed by MSCI downgrade warning

Indonesian President Prabowo Subianto told his Cabinet in Jakarta on October 21 that the country would not be intimidated by MSCI, after the index provider said it was considering downgrading Indonesia’s stock market classification in 2027. The warning has been followed by a record two-day sell-off in Indonesian shares, raising the stakes for a decision that could affect international investment flows.

Speaking at the Presidential Palace, Prabowo accused MSCI of trying to frighten Indonesia. His remarks were broadcast on the Indonesian government’s official YouTube channel. ‘The Indonesian nation fears no one and will not be cowed,’ he said, according to Channel NewsAsia.

Why MSCI is considering a downgrade

MSCI’s indexes are widely followed by international investors. Channel NewsAsia reported that a downgrade could prompt capital outflows and remove Indonesian shares from major emerging-market index flows. The two-day stock rout after the warning was described as a record by both outlets; The Straits Times put the loss in market value at about US$82 billion before some recovery on October 20.

MSCI’s response and the political reaction

In an emailed response to Channel NewsAsia’s request for comment, MSCI said its decisions follow transparent, rules-based methodologies. It said it would continue to monitor Indonesia’s market and engage with market participants and authorities. Prabowo’s comments were his first public response to the downgrade warning, according to Channel NewsAsia.

The debate has also drawn allegations from former Indonesian trade minister Muhammad Lutfi. Channel NewsAsia reported that he claimed Singapore state investors Temasek and GIC had pressured MSCI to issue its warning. Both institutions denied the claim. Temasek’s Asia Pacific investment head, Fock Wai Hoong, called the allegation baseless at a press conference on October 21.