Too Broken For Frontier: Indonesian Markets Suffer Worst Rout Since 1998 As MSCI Threatens The "Argentina Treatment"

Indonesian markets extended their selloff after MSCI warned the country could face a two-step downgrade, leaving emerging markets for “Standalone” status while skipping Frontier. On Monday, the Jakarta Composite (JCI) fell 3.6% after a 11.6% crash on Friday—its biggest one-day drop since January 1998. The two-session drop of nearly 15% is steeper than any two-day period in the 1998 Asian financial crisis, and the index hit a six-year low intraday. MSCI’s fresh move follows earlier warnings in January, when it froze index additions over “investability” concerns and threatened a move to Frontier if free-float data wasn’t fixed. Reuters says about $350bn in market value has been wiped out since January, with $60bn lost on Friday alone. Analysts cited foreign investors exiting equities and pressure on bonds and the rupiah.