Indonesia‘s stock market operator halved the daily down limit on stock prices on Monday as authorities try to put the brakes on the market’s heaviest-ever selloff, unleashed by MSCI looking to cut Indonesia from its suite of investable indexes.
The Indonesia Stock Exchange lowered the down limit for stocks to 7% from 15%, effective from Monday until December 31.
The move matters because it slows selling in a market in freefall. Selling was triggered when index provider MSCI said on Friday Indonesia was no longer worthy of “emerging market” status and proposed a downgrade to “standalone,” which would exclude it from MSCI’s global emerging and frontier indexes.
A two-day fall of 16% is the steepest such selloff for the Jakarta Composite benchmark .JKSE on LSEG records stretching back to 1990, and heavier than falls through the Asian financial crisis of 1998.
A down limit of 1 rupiah applies to stocks worth below 10 rupiah apiece. Sell orders below limit-down prices are automatically rejected by the bourse‘s trading system. The move was made “to ensure orderly, fair, and efficient securities trading, as well as to mitigate market volatility,” the exchange said in a statement.
Reuters
