Indonesian equities fall the most since 1998 after MSCI outlines plans to remove them from key indexes
Indonesian equities suffered their biggest drop since 1998 on Friday after MSCI said the market no longer merited emerging market status. Turkey's main index also fell more than 3% after an MSCI freeze, while European stocks rose as the tech selloff eased.
The Investor · Invest desk
MSCI said Indonesia's market no longer merited emerging market status and plans to remove it from key indexes tracked by funds. Indonesian equities had their biggest drop since 1998. Turkey's main index slid more than 3% after MSCI froze certain index changes.
- Who has to decide decision MSCI Said Indonesia no longer merited emerging market status and outlined plans to remove it from key indexes, claim 4
- What it costs cost Indonesian equities Suffered their biggest drop since 1998 after MSCI's announcement, claim 4
- Who's exposed exposure Funds tracking MSCI indexes Track the key indexes MSCI plans to remove Indonesia's market from, claim 4
- What it costs cost Turkey's main stock index Slid more than 3% after MSCI froze certain changes to its Turkey equity indexes, claim 5
| Who | How | Kind | Claim |
|---|---|---|---|
| MSCI | Said Indonesia no longer merited emerging market status and outlined plans to remove it from key indexes | decision | 4 |
| Indonesian equities | Suffered their biggest drop since 1998 after MSCI's announcement | cost | 4 |
| Funds tracking MSCI indexes | Track the key indexes MSCI plans to remove Indonesia's market from | exposure | 4 |
| Turkey's main stock index | Slid more than 3% after MSCI froze certain changes to its Turkey equity indexes | cost | 5 |
What happened
- Stronger-than-expected US inflation data on Wednesday pushed traders to add bets on further rate hikes, and investors piled into Treasuries and other government bonds.
- By 1055 GMT the STOXX 600 was up 0.6%, the DAX about 1%, the CAC 40 0.5% and the FTSE 100 less than 0.1%.
- The dollar fell 0.4% to an index level of 101.65, on track for its first weekly decline after three weeks of gains.
- Brent crude was at $106.14 a barrel and still headed for a weekly gain, with attacks around the Strait of Hormuz surging over the past 10 days.
Why it matters
- Who's exposed exposure Funds that track the key MSCI indexes Indonesia is due to leave are newly exposed to a market that has just had its biggest drop since 1998.
- What it limits constraint A freeze of certain index changes, a smaller step than removal, was enough to take more than 3% off Turkey's main index. A rule change need not be final to move prices.
- What doesn't add up contradiction Rate-hike bets rose after hot inflation data, yet G7 bond markets were heading for their best week since late May. Bond buyers were pricing AI credit risk ahead of inflation.
- Who has to decide decision One large allocator did not treat the selloff as a reason to cut: Amundi's Amelie Derambure kept her overweight in US equities despite her doubts on AI monetization.
The recovery is partial. At 1055 GMT the MSCI World index was up 0.4% but still set for a weekly loss [6]. S&P 500 futures were up 0.2% while Nasdaq futures were still in the red, with investors worried about mounting credit risks among heavily indebted data-centre operators such as CoreWeave [8]. The week's selloff in technology and chip stocks was set off by concerns over higher interest rates and the debt-fuelled financing behind the AI boom [2].
The bond market sends a different signal from the rate-hike bets. Traders added to those bets after Wednesday's inflation data [3], yet G7 government bond markets were on course for their strongest weekly performance since late May, with investors buying safety on worries about AI-related companies' finances [12]. This week, for the first time since August, German bond yields and the STOXX 600 showed a positive correlation [13]. The link had loosened this year on worries that the Iran war might stoke inflation and hold borrowing costs up for longer [17].
We think the AI credit worry outweighed the inflation print in bonds this week. The counter-case is already visible: European government bond yields edged higher on Friday, with Germany's 10-year at 3.4355% [14], and if that continues the argument that bonds are hedging equities again gets thinner.
Asian stocks mostly rose on Friday [15], so Indonesia's drop was not a regional move. It followed MSCI's statement that the market no longer merited emerging market status, with plans to remove it from key indexes tracked by funds [4]. Turkey's main index slid more than 3% after MSCI froze certain changes to its Turkey equity indexes [5]. The report does not say when the Indonesian removal takes effect, what the Turkey freeze covers, or how much money tracks the indexes involved.
Two markets repricing on the day MSCI acted, while the rest of Asia rose, supports a narrower finding than index-classification risk across emerging-market portfolios. It could widen if MSCI applies the same test elsewhere, and it could fade if either index recovers next week; a rebound would argue for the second.
Amundi's Amelie Derambure is holding the doubt and the position together. "The question of monetization to me is still the big question that is not fully answered. There are still some doubts about the sustainability of the profits and the margins from some actors in the sector," she said [9]. Even so, she kept her overweight in US equities, expecting earnings to hold up well enough to cap any market correction [10]. If Nasdaq futures stay below the S&P 500 and the credit worries around data-centre operators deepen, the stabilisation call is wrong.
What to watch
- Whether Nasdaq futures close the gap with S&P 500 futures as credit worries around data-centre operators such as CoreWeave are tested.
- Whether MSCI publishes a date for Indonesia's removal and the scope of the Turkey freeze, and whether either index recovers.
- Brent at $106.14 and the Hormuz attacks: renewed oil strength would test the bond rally and the dollar's first weekly decline in four weeks.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence55
- Adoption
- Not scored
- Hype gap
- Not scored
- Incentives
- Not scored
- Confidence58
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
European stocks rose on Friday as markets stabilised after a sharp tech-led selloff, while the dollar headed for a weekly loss.
- [2]
Markets were rattled this week by concerns over higher interest rates and the debt-fuelled financing behind the AI boom, triggering a selloff in technology and chip stocks.
- [3]
Traders increased bets on further US rate hikes after stronger-than-expected inflation data on Wednesday, while investors piled into Treasuries and other government bonds.
- [4]
Indonesian equities suffered their biggest drop since 1998 after index provider MSCI said the country's market no longer merited emerging market status and outlined plans to remove it from key indexes tracked by funds.
- [5]
Turkey's main stock index slid more than 3% after MSCI froze certain changes to its Turkey equity indexes.
- [6]
At 1055 GMT, the MSCI World Equity Index was up 0.4% but still set for a weekly loss.
- [7]
At 1055 GMT the STOXX 600 was up 0.6%, Germany's DAX up around 1%, France's CAC 40 up 0.5%, and London's FTSE 100 up less than 0.1%.
- [8]
S&P 500 futures were up 0.2%, but Nasdaq futures were still in the red as investors remained worried about mounting credit risks linked to the AI trade, particularly among heavily indebted data-centre operators such as CoreWeave, which helped trigger Thursday's selloff.
- [9]
"The question of monetization to me is still the big question that is not fully answered. There are still some doubts about the sustainability of the profits and the margins from some actors in the sector," said Amelie Derambure, a senior multi-asset portfolio manager at Amundi in Paris.
- [10]
Derambure said she remained overweight US equities and expected earnings to be strong enough to limit any market correction.
- [11]
The dollar fell 0.4%, leaving the dollar index at 101.65 and on track for its first weekly decline after three weeks of gains, as lower Treasury yields reduced the currency's appeal.
- [12]
European government bond yields remained lower on the week as investors sought the safety of government debt amid concerns about AI-related companies' finances, and G7 government bond markets were on course for their strongest weekly performance since late May.
- [13]
The correlation between German bond yields and the STOXX 600 turned positive this week for the first time since August, suggesting government debt is regaining some of its safe-haven appeal.
- [14]
European government bond yields edged higher on Friday, with Germany's 10-year yield at 3.4355%.
- [15]
Asian stocks mostly rose on Friday and bond markets steadied, with investors reversing some of the previous session's moves.
- [16]
Brent crude futures were at $106.14 a barrel but still headed for a weekly gain amid concerns over Middle East supplies, and attacks around the Strait of Hormuz have surged in the past 10 days.
- [17]
The correlation between German bond yields and the STOXX 600 weakened this year amid concerns that the war in Iran could fuel inflation and keep borrowing costs higher for longer.
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Sources
1 independent publisher whose own reporting we read for this story.
- channelnewsasia.comEuropean stocks rise, dollar set for weekly loss after yields drop
1 article · October 16, 2026
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