By: Eko B Supriyanto, Editor-in-Chief of InfoBank Media Group
There was an unusual sight at the Indonesia Stock Exchange building this past Tuesday. Deputy Speaker of the House of Representatives Sufmi Dasco Ahmad arrived alongside Danantara CEO Rosan Roeslani, accompanied by OJK Commissioner Friderica Widyasari Dewi. They came not to celebrate anything, but to calm the frenzied market. But as the wise say, when important figures suddenly scramble to calm things down, that’s where the problem lies.
By the market close on Tuesday (May 19, 2026), the Composite Stock Price Index (IHSG) continued its free fall. In fact, the market opened in the red again today (May 20, 2026). Over six consecutive trading days, the IHSG has plummeted relentlessly, and so far this year, it has nosedived by more than 26 percent. The market seems to be saying: Sorry, sir, we’re not convinced yet.
Dasco is indeed optimistic—as is always expected of a politician. “We have to be optimistic, always optimistic,” he said on Tuesday (May 19). However, what brokers and analysts hear is the same tune they’ve heard so many times before: the promise that everything will be fine. Yet the market doesn’t buy into empty optimism. The market only recognizes numbers, and those numbers aren’t favoring anyone right now.
Rosan is no less optimistic. He spoke of strong fundamentals, of state-owned enterprise (SOE) stock dividend yields reaching 10 to 11 percent, and of Danantara investing for the long term. “This is a positive journey ahead,” he said. But when the IHSG has become the worst-performing index among all global stock markets, such statements sound odd. It’s like a doctor who keeps saying “the patient is perfectly fine” while the heart monitor already shows a flat line.
The OJK, through Friderica Widyasari Dewi—known as Kiki—described the IHSG’s decline as “still moderate.” She cited the 1.98 percent correction on the first day of the MSCI announcement and the 1.85 percent drop on May 18 following the long holiday. What kind of moderation is she referring to? If a correction of that magnitude is called moderate, we have to wonder: how severe would it have to be to be considered an emergency?
Let’s take a closer look. MSCI, a global index provider headquartered in New York, announced the “red card”—the removal of six Indonesian stocks from the MSCI Global Standard Indexes—on May 13, 2026, effective June 1, 2026. The stocks in question are AMMN, BREN, TPIA, DSSA, CUAN, and AMRT. Additionally, 13 other stocks were removed from the MSCI Small Cap Indexes. Shortly thereafter, FTSE Russell also announced the removal of Indonesian stocks falling under the high shareholding concentration (HSC) category in its June 2026 index review.
What does this mean? MSCI and FTSE Russell are the determinants of global passive capital flows. When they remove Indonesian stocks, exchange-traded funds (ETFs) and index mutual funds that track those benchmarks will automatically withdraw their funds. This is no longer a matter of sentiment—it is a cold, mathematical, automatic mechanism. Passive funds have no emotions. They simply follow algorithmic instructions. When MSCI says “exit,” they exit. No negotiations, no pleas, no courtesy visits to the IDX building can stop it.
An analyst quietly remarked to the author: “The biggest lesson from May 2026 is that the problem with Indonesia’s capital market isn’t just volatility, but a structure of dependency. As long as market depth remains shallow, domestic investors are weak, free float is low, and governance isn’t robust, MSCI, foreign capital flows, and global risk sentiment will continue to wield significant influence over the direction of Indonesia’s market.”
This is where the problem lies. Indonesia’s capital market isn’t suffering from a common cold; it’s afflicted by a chronic illness whose roots run deep beneath the surface. Fragile structural foundations make our stock market highly vulnerable to external shocks.
It is worth viewing these events within a broader political-economic framework. A nagging question arises: why is the market sinking further precisely when all the top officials come to calm the situation?
According to Infobank’s records, in the world of finance, the opposite of “trust” is not “distrust,” but “uncertainty.” And it is that uncertainty that is currently plaguing the Indonesian market. It is not just global uncertainty—the war in the Middle East, hawkish monetary policies in developed nations—but also uncertainty stemming from within the country itself.
For example, the rumor about the formation of a special agency for strategic commodity exports that spread on Tuesday (May 19). The market immediately reacted negatively. Stocks in the raw materials, energy, and transportation sectors were hit the hardest. Commodity-based stocks plummeted, causing the basic materials sector to drop by 7.3 percent. Why? Because market participants fear the policy will suppress selling prices and corporate profit margins. This is a rational response to uncertainty: it’s better to exit first and wait until the situation becomes clearer.
When Coordinating Minister for the Economy Airlangga Hartarto was asked about the rumor, he simply said: “We’ll wait until tomorrow. Tomorrow we’ll discuss the economic conditions in the House of Representatives.” A diplomatic answer that might look good on camera, but is fatal for the market. The market cannot wait for “tomorrow.” The market moves in seconds. In the brief interval between the journalist’s question and Airlangga’s answer, billions of rupiah had already changed hands.
This is what economists call policy uncertainty. It is poison for investment. When business owners cannot predict what the government will do tomorrow, they will postpone expansion. When investors cannot predict the direction of policy, they will withdraw their funds.
So we arrive at the main question: are most stocks on the Indonesia Stock Exchange truly “rotten,” or is there something even more rotten than that—the system itself?
The answer, as usual, isn’t that simple. There are stocks with genuinely problematic fundamentals: poor corporate governance, conflicts of interest, financial statement manipulation, and even extreme concentration of ownership. FTSE Russell specifically highlights stocks with high shareholding concentration (HSC)—stocks owned by a handful of people, resulting in low liquidity and vulnerability to price manipulation. Such stocks are not only “rotten” but also dangerous to the overall health of the market because they distort healthy price-formation mechanisms.
However, blaming these stocks alone is like blaming a dead fish in a murky aquarium. The water itself is the problem. Indonesia’s capital market has long been trapped in an unhealthy ecosystem: weak protection for minority investors, half-hearted law enforcement, and an oligarchy that controls the majority of market capitalization.
On Monday’s trading session (May 18, 2026), 616 stocks were in the red, while only 125 gained ground. This 5:1 ratio is more than just a number—it’s a portrait of the gloom spreading across nearly the entire trading floor. This indicates that the pressure is not limited to the much-hyped “junk” stocks, but also extends to fundamentally sound stocks that have been swept up in the mass sell-off.
Another even more startling figure: since the start of the year, foreign investors have recorded net sales of Rp50.63 trillion. Fifty trillion rupiah! That is a massive amount by the standards of the Indonesian capital market. Such a large sum of capital is flowing out not because Indonesian stocks have suddenly become poor investments, but because the overall perception of risk regarding Indonesia has increased.
This is where we need to analyze this phenomenon more clearly: the Indonesian capital market is not facing a crisis of corporate fundamentals, but a crisis of institutional credibility. This is not a micro crisis, but a macro crisis. It is not about Issuer A or Issuer B performing poorly, but about the Indonesian capital market ecosystem systematically failing to build long-term investor confidence.
According to Infobank’s records of past crises, economic crises are often not merely crises of numbers, but crises of mindset. And what has been witnessed at the Indonesia Stock Exchange (IDX) over the past few days is a portrait of that crisis of mindset.
The visit by Dasco, Rosan, and Kiki to the IDX is a symbolic gesture. It is important, but it is not enough. The market cannot be calmed by symbols. The market needs concrete, measurable, and—most importantly—consistent policies. The market needs assurance that the government will not suddenly issue surprising policies in the middle of the night. The market needs a guarantee that the law will be enforced fairly and without favoritism against rogue capital market players.
Optimism, as demonstrated by Dasco, is indeed necessary. But optimism without action will amount to nothing more than empty rhetoric. And the market, with all the sophistication of its algorithms, possesses an extraordinary ability to distinguish between empty rhetoric and genuine commitment.
Infobank has always emphasized that the economy cannot be separated from politics, and politics cannot be separated from morality. A healthy capital market requires three things: legal certainty, transparency, and accountability. Without these three, the market is merely a casino disguised as an investment vehicle.
So, where is the Indonesian capital market headed? Will it continue to plummet to its lowest point, or is there hope for recovery?
We must admit honestly: in the short term, the prospects are slim. The Bank of Indonesia’s Board of Governors meeting on May 19–20, 2026, is expected to raise the BI Rate by 25 basis points to 5 percent in order to ease pressure from the weakening rupiah. While this interest rate hike is necessary to maintain exchange rate stability, it will create mixed sentiment in the stock market as it could potentially constrain liquidity and dampen investment interest in risky assets.
Meanwhile, the specter of a massive capital outflow on May 29, 2026—when six Indonesian stocks are officially removed from the MSCI Global Standard Index—still looms large. The market is waiting to see whether Bank Indonesia and the government have sufficient ammunition to withstand the onslaught of capital outflows.
However, as political economists have always emphasized, every crisis brings opportunities for reform. The wave of stock delistings by MSCI and FTSE Russell is, in fact, a harsh wake-up call that should rouse us from our long slumber. This momentum can be leveraged to improve the quality of the capital market: strengthening governance, enhancing transparency, cracking down on market manipulation, and—most crucially—rebuilding investor confidence.
The problem is, moments like this have come and gone far too often without bringing about meaningful change. Every time the market crashes, officials scramble to reassure the public. Once the market recovers, they go back to their own business. This cycle keeps repeating itself, and with each occurrence, more and more investors are losing faith.
And the fact is, “The market doesn’t need words. The market needs certainty. And certainty can only be built on a foundation of fair laws, clean governance, and consistent policies.” That’s not just a hollow statement either—it’s a reality.
In fact, everyone knows what happens next: optimism is constantly touted, visit after visit is made, statement after statement is issued. But as long as that foundation remains unstrengthened, the IHSG may continue to search for its deepest bottom. And we can only watch, wondering: just how deep is the bottom of this murky “aquarium” of a market? (*)
