Indonesian Stocks Rebound Amid Frontier Market Status Concerns

Indonesian stocks recovered modestly after regulators introduced measures to alleviate fears of a downgrade to frontier market status. The Jakarta Composite Index reduced its losses, though investor sentiment remained fragile, with MSCI warnings leading to downgrades from Goldman Sachs and UBS.

Indonesian stocks experienced a modest recovery as the nation's regulators unveiled strategies to restore investor confidence. This followed a sharp decline caused by concerns over a potential downgrade to frontier market status by MSCI.

Regulators doubled the free-float requirement for listed firms to 15% to address MSCI concerns. Despite this, the Jakarta Composite Index still showed a significant decrease of 1.7%, recovering from an 8% drop which halted trading.

Investment banks Goldman Sachs and UBS downgraded Indonesian stocks as MSCI flagged transparency issues. Despite encouraging communication between Indonesia's financial authorities and MSCI, market volatility remains due to macroeconomic uncertainties and fiscal management concerns.

(With inputs from agencies.)