Indonesia stock exchange CEO resigns after historic market crash

Friday 30 January 2026 - 15:50

By: Dakir Madiha

Indonesia stock exchange CEO resigns after historic market crash

Iman Rachman, CEO of the Indonesia Stock Exchange, stepped down Friday, taking responsibility for a two-day market plunge that wiped out over 80 billion dollars in value following a warning from MSCI Inc. about a potential downgrade to frontier market status.

"In light of responsibility for the events of the past two days, I hereby declare my resignation," Rachman told journalists at a January 30 press conference. "I hope this is for the best for the capital market and that my resignation will improve our capital market."

The Jakarta Composite Index tumbled more than 8 percent over Wednesday and Thursday, its worst two-day drop since the 1998 Asian financial crisis. Trading halted twice via circuit breakers as the benchmark fell as much as 16.7 percent before partial recovery.

The rout ignited after MSCI paused all additions and updates to Indonesian securities in its indexes due to "fundamental investability issues," including opaque shareholding structures and potential coordinated trading that distorts pricing. The index provider warned of a downgrade from emerging to frontier market status by May 2026 unless regulators show progress.

Goldman Sachs and UBS downgraded Indonesian equities afterward, with Goldman forecasting up to 7.8 billion dollars in capital outflows on a downgrade. Foreign investors dumped about 645 million dollars in Indonesian stocks during the sell-off, per exchange data.

Indonesian regulators moved swiftly to stem damage. The Financial Services Authority will double the minimum free float requirement for listed companies to 15 percent from 7.5 percent. The exchange plans to review shareholders holding under 5 percent stakes. "The government has every incentive to fix these issues, as systemic outflows would be substantial and could significantly impact the market," said Paul Dmitriev, lead analyst at Global X ETFs. Regulators described communications with MSCI as "positive" and hope to resolve concerns by March.

Market turbulence amplifies investor worries over President Prabowo Subianto's economic stewardship. His January 27 appointment of nephew Thomas Djiwandono as Bank Indonesia deputy governor, after abruptly sacking respected Finance Minister Sri Mulyani Indrawati in September 2025, rattled markets. The rupiah hit a record low of 16,985 per dollar last week. A frontier downgrade would align Indonesia with Bangladesh, Pakistan, Sri Lanka, and Vietnam, forcing passive funds tracking MSCI's emerging markets benchmark to offload holdings.