Kuya Food Express JAKARTA – The Jakarta Composite Index (IHSG) plunged by more than 3% at the opening of trading on Monday, May 18, 2026. This sluggish performance persisted following global index provider MSCI Inc.’s decision to remove a total of 18 Indonesian stocks from its prominent indices.
Equity Analyst at Indo Premier Sekuritas, Imam Gunadi, explained that during the trading period of May 18-22, 2026, market focus would remain on the implementation of MSCI’s rebalancing, ahead of its effective date on May 29, 2026.
Last week, when MSCI Inc. announced its rebalancing of Indonesian stocks, the IHSG closed weaker at 6,723.32. Imam noted that global investors had already begun repositioning their portfolios in response to significant changes in MSCI’s constituents.
This early adjustment by foreign investors, prior to the May 29, 2026, effective date, resulted in a considerably aggressive wave of passive outflows from the Indonesian capital market.
“MSCI’s decision to delist several large-cap stocks such as AMMN, BREN, TPIA, DSSA, and CUAN from its Global Standard Index served as the primary catalyst for the increased selling pressure in the domestic market,” he stated in an official release on Monday, May 18, 2026.
This challenging market condition was further exacerbated by global investors’ risk-off sentiment. Expectations for a Federal Reserve interest rate cut receded once more after the U.S. released persistent high inflation data. Some market participants are even anticipating a rate hike by year-end.
Adding to these domestic pressures, unresolved tensions in Iran continued to drive oil prices sharply upward, surging past the US$105 per barrel mark.
“The combination of a strong dollar, elevated oil prices, and foreign outflows ultimately created layered pressure on the domestic market,” he emphasized.
Meanwhile, the Research Team at Kiwoom Sekuritas stated that while the May 2026 MSCI rebalancing results indeed appeared negative for the Indonesian market, a closer examination revealed that selling pressure was not evenly distributed. Instead, it was highly concentrated on specific stocks.
Kiwoom identified shares of PT Dian Swastatika Sentosa Tbk. (DSSA) and PT Barito Renewables Energy Tbk. (BREN) as the primary targets of the most significant pressure during this MSCI rebalancing.
“The results of the MSCI May 2026 rebalancing certainly look negative for Indonesia. However, upon closer inspection, the selling pressure is not broadly dispersed; rather, it is highly concentrated in a few specific stocks,” wrote the Kiwoom Sekuritas Research Team, as quoted on Monday, May 18, 2026.
Kiwoom suggested that the year-to-date (YtD) foreign sell-off, amounting to Rp49 trillion, might not entirely reflect the MSCI effect. This is because a portion of the pressure likely occurred earlier, as global investors began adjusting their positions before the May 29, 2026, implementation date.
Beyond the MSCI factor, Kiwoom noted that the market remained overshadowed by various external sentiments. These included the weakening rupiah, which breached the Rp17,500 per U.S. dollar level, the ongoing conflict in Iran, high U.S. Treasury yields, and broader global uncertainties.
Amidst these challenging conditions, Kiwoom highlighted several other catalysts that the market might be overlooking. One crucial point is Indonesia’s secure status as an Emerging Market, confirming it will not be downgraded to a Frontier Market.
“Kiwoom Research believes the market might currently be overly focused on the ’18 stocks removed’ headline, without realizing that a significant portion of the pressure has already unfolded gradually over recent months,” they added.
The IHSG opened in the red as trading commenced at the start of the week, on Monday, May 18, 2026, following a long holiday break.
Based on data from RTI Infokom, the IHSG was observed to have dropped 3.14% to 6,512.28 at 09:32 WIB. The index traded within a range of 6,509.88-6,631.28 during early trading.
A total of 96 stocks strengthened, 572 weakened, and 69 stocks traded stagnantly. The market capitalization on the Indonesia Stock Exchange (BEI) was recorded at Rp11,427.62 trillion.
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Summary
The Jakarta Composite Index (IHSG) experienced a significant decline of over 3% on May 18, 2026, driven primarily by MSCI’s decision to remove 18 Indonesian stocks from its indices. Foreign investors have initiated aggressive portfolio adjustments ahead of the May 29 effective date, focusing selling pressure on major stocks like AMMN, BREN, and TPIA. This divestment, combined with broader risk-off sentiment, has significantly weighed on domestic market performance.
Market pressure is further intensified by external factors, including a weakening rupiah breaching the Rp17,500 per U.S. dollar level, rising oil prices due to geopolitical tensions in Iran, and shifting expectations regarding U.S. Federal Reserve interest rates. While analysts note that the selling is concentrated rather than widespread, the index continues to face volatility from a strong dollar and global economic uncertainty. Despite these challenges, experts maintain that Indonesia’s status as an Emerging Market remains secure.