Prabowo challenges MSCI over Indonesia downgrade warning

Indonesian President Prabowo Subianto accused MSCI of seeking to intimidate the country during an October 21 Cabinet meeting, responding publicly for the first time to a downgrade warning that sparked a record two-day stock market selloff.

The index provider said Indonesia could be reclassified as a standalone equity market, arguing that authorities had taken insufficient action against coordinated trading. Such a downgrade threatens substantial capital outflows and exclusion from major emerging-market index investment flows.

Prabowo said Indonesia would not be intimidated. MSCI responded that it uses transparent methodologies governed by rules, and said it would keep assessing conditions in Indonesia while maintaining contact with authorities and market participants.

Separately, Singapore state investors GIC and Temasek denied allegations by former Indonesian trade minister Muhammad Lutfi that they had pressured MSCI to issue the warning. GIC said individual company and asset fundamentals guide its investments, rather than index classifications. Fock Wai Hoong, Temasek Global Investments' head of Asia Pacific excluding China and India, said neither the institution nor its employees had approached MSCI to influence its decisions.

Indonesian lawmakers also called for scrutiny of MSCI's approach. Hanif Dhakiri, a member of the parliamentary finance oversight committee, urged transparency and consistent treatment across countries. Opposition PDI-P lawmaker Said Abdullah said Indonesia should address MSCI's concerns seriously while also examining the basis of its judgments.