Allspring says Indonesian bank and telecom stocks may further decline amid MSCI downgrade risk

Allspring Global Investments pointed out that Indonesian banking and telecommunications stocks may face further declines. Although these companies are among the most robust businesses operating in Indonesia, they also find it difficult to remain unaffected during the widespread sell-off amid the risk that MSCI may downgrade the Indonesian market rating. The combined weight of the banking and telecommunications sectors in the MSCI Indonesia Index is about 80%. Since MSCI first issued a warning in January about a potential downgrade of this Southeast Asian market, the index has fallen by more than 40%. During this period, the share price of PT Telkom Indonesia Persero has almost halved; meanwhile, leading financial institutions such as PT Bank Central Asia and PT Bank Rakyat Indonesia Persero have all seen their share prices drop by at least 23%.