The Indonesian stock market experienced a dramatic turn of events as the Jakarta Composite Index (IHSG) was subject to a trading halt for the second time in two consecutive trading days. On Thursday, January 29, 2026, the IHSG opened at 8,027 points, only to plummet to 7,730 points within 20 minutes, triggering a 30-minute suspension of trading.
Amidst this market turbulence, Minister of Finance Purbaya Yudhi Sadewa swiftly offered reassurance, expressing strong confidence in the trajectory of the Indonesian stock market for the remainder of the year. “Optimistic for 10,000, there’s no need to fear,” Purbaya declared from the Coordinating Ministry for Economic Affairs office on the same day.
Purbaya asserted that the current pressure observed in the stock market does not reflect a weakening of Indonesia’s fundamental economic strength. He attributed the volatility to a temporary shock primarily driven by global market perception, particularly concerning the assessment by Morgan Stanley Capital International (MSCI).
“What I can assure is that our economic foundation is not problematic and will only accelerate in the future. This might be people feeling shocked by the possibility of our market being considered a frontier market level,” he explained, addressing the underlying market sentiment.
He emphatically stated that Indonesia will not be downgraded to a frontier market category, citing the nation’s robust economic foundations. Purbaya added that any concerns raised by MSCI would be promptly addressed and followed up on by the relevant authorities, including the Chairman of the Financial Services Authority (OJK), Mahendra Siregar.
Visitors observe a digital screen displaying movement data for the Jakarta Composite Index (IHSG) at the Indonesia Stock Exchange (IDX), Jakarta, Thursday, January 29, 2026. The IHSG experienced a temporary trading halt during the first session at 09:30 WIB but managed to pare back its corrections by the end of the session. – (Republika/Thoudy Badai)
Purbaya views the current stock market fluctuations as temporary and urged investors not to overreact. He reiterated his long-standing warnings regarding the risks associated with speculative stocks, which the government has consistently highlighted.
“This is clearly a temporary shock because our fundamentals are not problematic. If it’s the highly speculative ‘gorengan saham’ (fried stocks) that are falling, I’ve warned about that since long ago; we must clean up the exchange from such stocks,” Purbaya emphasized, differentiating between sound investments and risky ventures.
According to the Minister, the bulk of the market pressure is concentrated on non-fundamental stocks, while large-cap or blue-chip stocks continue to demonstrate resilience. He advised, “The big ones are still there; the blue-chip stocks haven’t risen too high. If anyone is scared, just shift to those.”
Further bolstering his conviction, Purbaya expressed confidence that Indonesia’s fiscal foundation is poised for significant strengthening. “So, our economic foundation will continue to improve going forward. Yesterday, I already overhauled customs, and next week I will be tackling tax reforms,” he revealed, outlining key policy initiatives.
He anticipates that stronger state revenue will bolster the government’s fiscal space, ensuring economic stability and growth. “Our income should thus improve significantly, resolving any issues with our fiscal foundation. The funds generated will be allocated towards fostering economic growth and job creation. So, there’s absolutely no need to fear,” he added.
Regarding the duration of the market pressure, Purbaya projected a short-lived impact. “Usually, it lasts 2 days, 2 and a half days, 2 or 3 days, and then it’s over,” he estimated, suggesting a swift recovery.
He elaborated that market apprehension often stems from a lack of full understanding of global index assessment mechanisms. “This is MSCI entering an index called the MSCI index. Can a stock enter or not? If it’s good, it can. But if speculative stocks are forced in, MSCI becomes suspicious. They just ask for more transparency in the calculations,” Purbaya clarified.
However, the pressure on Indonesia’s stock market has also been echoed by global financial institutions. Goldman Sachs recently downgraded its rating on Indonesian stocks to ‘underweight’ following the warning from MSCI, anticipating continued passive selling by global investors.
“We anticipate continued passive selling and believe this development will be an overhang holding back market performance,” wrote Goldman Sachs analysts, as quoted by Business Times on Thursday, January 29, 2026.