After Indonesia's stock market lost $80 billion, regulatory authorities urgently stabilized the market: implementing three reforms and resigning the stock exchange chairman.

Indonesian Chief Economic Minister Airlangga Hartarto promised on Friday to increase financial market transparency and improve corporate governance. Previously, the chairman of the Indonesian Stock Exchange resigned due to an $80 billion stock market crash to take responsibility. Hartarto stated at a press conference that the authorities are committed to stock market reform and emphasized that the country's economic fundamentals remain robust. Proposed improvement measures include: doubling the free float ratio of stocks to 15%; allowing pension funds and insurance funds to increase their capital market investment ratio from 8% to 20%; and reviewing the relationships of shareholders holding less than 5% ownership. Airlangga stated: "The Indonesian government is committed to safeguarding the rights of all investors through maintaining good corporate governance and transparency." Due to concerns about ownership structure and trading transparency, index provider MSCI issued a warning on Wednesday that it might downgrade the Indonesian stock market to "frontier market" level, triggering the largest two-day drop since April. If downgraded to a frontier market, it will have a significant impact on passive fund flows in the Indonesian market. Following the MSCI announcement, UBS downgraded the Indonesian stock market to a neutral rating. Goldman Sachs stated in a research report that MSCI's assessment of the investability of the Indonesian market could lead to outflows of investments worth billions of dollars. Goldman Sachs has downgraded the Indonesian stock market to "sell" and warned that if the Indonesian market is reclassified as a frontier market, the pressure of capital outflows will significantly increase. The CEO of the Indonesian Stock Exchange, Iman Rachman, resigned on Friday. Iman stated at a press conference: "I hope this is the best decision for the capital market. I hope my resignation can promote improvements in the capital market, and I hope that the index which opened higher in morning trading today will continue to rise in the coming days." An official from the Indonesian Financial Services Authority (OJK) told reporters that the agency will ensure that Iman's resignation will not impact the operation of the exchange. The official stated that OJK will lead the implementation of reforms and aims to address MSCI's concerns by May. Inarno Djajadi, responsible for regulating the capital market, stated: "We remind all investors to remain calm and rational in making investment decisions." The Jakarta Composite Index fell by over 8% on Wednesday and Thursday, but rose by 1.18% following the announcement of measures aimed at addressing MSCI's concerns and alleviating investor anxiety. The Indonesian rupiah to US dollar exchange rate is currently at 16,790, hovering around the historic low of 16,985 set last week. Mohit Mirpuri, portfolio manager at Singapore's SGMC Capital, stated that accountability must be taken for the loss of confidence, referring to Iman. Mirpuri said: "In the long term, this is a reset and an opportunity for the exchange to become stronger through clearer standards and governance structures." Foreign outflows have increased due to concerns about Indonesian President Prabowo Subianto widening the fiscal deficit and increasing state intervention in the financial markets. His appointment of his nephew Thomas Djiwandono as central bank governor this month, as well as the dismissal of the respected Finance Minister Sri Mulyani Indrawati last year, have shaken confidence in his governing abilities. Regulators stated that communication with MSCI is progressing smoothly, and they are waiting for a response to their proposed measures, hoping to implement these measures quickly. Their swift actions seem to have alleviated investor concerns, but market sentiment remains fragile. Paul Dmitriev, Senior Analyst and Co-Portfolio Manager at Global X ETFs, stated: "Policymakers want to address this issue. The government is fully motivated to address these issues because the scale of systemic capital outflows could have significant effects on the market." Exchange data shows that foreign investors sold approximately $645 million worth of stocks in the two-day selling spree, after already selling stocks worth $1 billion by 2025.