FACTBOX-Indonesia suffers a series of market sentiment setbacks in 2026
JAKARTA, March 4 (Reuters) - Fitch downgraded Indonesia's sovereign credit rating outlook from stable to negative on Wednesday, the latest in a series of blows to investor sentiment in Southeast Asia's largest economy.
Following are some details of the setbacks suffered over the last two months by the $1.4 trillion economy, which is a G20 member and a global commodities powerhouse, as well as some of its responses:
Global index provider MSCI MSCI.N in January froze any changes to its Indonesian stock listings over concerns about ownership and trading transparency. It also warned that Indonesia could be downgraded from "emerging market" to "frontier market" status if it failed to resolve the issues. Around $120 billion in market value was wiped out from Indonesia's stock exchange following MSCI's announcement.
Also in January, Goldman Sachs lowered its view on Indonesian equities to "underweight" and estimated that foreign investment outflows could reach $7.8 billion if Indonesia were downgraded by MSCI to frontier market status, though it deemed the scenario unlikely.
In February, rating agency Moody's cut Indonesia's credit rating outlook to "negative" from "stable", citing reduced predictability in policymaking. Like Fitch, it maintained its rating at Baa2 but said the shift to a negative outlook reflected policy effectiveness risks and signs of weakening governance.
Moody's also cut the outlook for several companies, including telecom firm Telkom Indonesia TLKM.JK, instant noodle maker Indofood CBP Sukses Makmur ICBP.JK, and heavy equipment and mining company United Tractors UNTR.JK.
Index provider FTSE Russell said in early February that it had postponed a review of Indonesia, flagging concerns similar to those raised by MSCI about how difficult it is to determine the levels of free-floating, or freely tradable, stock. FTSE said it would provide another update before a global review is due in May.
Following the MSCI announcement, a number of top Indonesian regulators resigned, including the chief of the Indonesia Stock Exchange (IDX), and Indonesian financial authorities promised major reform plans.
In response to Moody's，the Indonesian government said it would explain its policies in more detail to global rating agencies, including the purpose of its new sovereign wealth fund Danantara Indonesia. Moody's had also pointed to uncertainties related to Danantara's financing, policy direction, and investment priorities.
