Indonesia is facing an MSCI-related crisis as trading practices and dramatic share-price movements raise concerns about the integrity of its stock market. The situation could lead to a costly downgrade for the country by the index provider.
The issue came into focus after the share price of an obscure Asian delicacy maker rose by 5,000% over roughly seven weeks. While such a rally would be extraordinary anywhere, unusual market swings are sufficiently familiar in Indonesia that local traders use the expression “deep-fried stocks” to describe them.
A research note from Jakarta brokerage Samuel Sekuritas highlighted the episode in late January. The report was described as astonishing even by Indonesian market standards, where mysterious gyrations have become a recurring feature of trading.
Sources: Bloomberg Markets.