As the world turns and the fallout from months of insane conflict in the Middle East continues, here we go again but this time in South Asia as Indonesian authorities activated sidecars to stop the crash of the Jakarta Stock Exchange Composite. One just has to have Bloomberg Asia on in the background and see this headline to remind them of the Tiger Crash from long ago:
How bad did it get? From Investing.com’s website:
The turmoil in the Middle East is the obvious proximate cause of the emerging and advanced second world markets plus economies starting to crater. But the big trigger tonight was this story from the Straits Times of Singapore via Reuters:
MSCI set to remove Indonesia from global indexes
Why this threat?
From the article:
Indonesia’s stock market is no longer worthy of “emerging market” status, according to MSCI, which intends to remove it from a suite of products tracked by global investors, in a major setback likely to trigger capital outflows.
Indonesian equities are already the world’s worst performers this year, struggling since January when MSCI froze Indonesia in its indexes and threatened a downgrade to “frontier” status because of opacity in ownership and trading behaviour.
On Friday, it said reforms to address those problems had not made sufficient progress and that even a downgrade to frontier status would not reflect the severity of the issues.
Instead, it put Indonesia on a path to “standalone” status, which would exclude Indonesian stocks from global indexes tracked by billions of dollars in passive investment, forcing funds that follow or are benchmarked against the indexes to sell.
“Significant concerns remain around market dysfunction,” MSCI said in a statement posted on its website. “Accordingly, MSCI considers Indonesia’s continued classification as an emerging market no longer appropriate,” it said.
Now start thinking about all of the other markets impacted in a similar fashion by this ongoing trade and numerous real wars in Asia and the Middle East.
War has economic and political consequences as another hapless US President is about to learn.