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INDONESIA’S top financial regulator and the head of its stock exchange both resigned Friday, the most senior casualties so far from a market rout triggered by MSCI Inc.’s reform demands.

Mahendra Siregar stepped down late Friday as chairman of the Financial Services Authority, known as OJK, following days of turmoil in Indonesian assets. Inarno Djajadi, a commissioner overseeing capital markets, derivatives and the carbon exchange, along with deputy commissioner Aditya Jayaantara, also resigned, according to an official statement.

The announcement followed the resignation of the Indonesia Stock Exchange’s chief executive Iman Rachman earlier Friday, as policymakers rush to avert a downgrade and restore confidence.

The financial regulators’ departures were “a form of moral responsibility to support the necessary recovery steps,” the OJK said, as policymakers scramble to contain a fallout from MSCI’s concerns over transparency, and avert the risk of Indonesia losing its emerging-market status.

Earlier, officials said they were preparing additional steps to support the market, including changes to the exchange’s shareholding structure and higher caps on insurers’ capital-market allocations.

The resignations rounded out a volatile week for Indonesian assets after index compiler MSCI flagged concerns about transparency in Southeast Asia’s biggest market, sending benchmark stocks to their worst two-day rout in nearly three decades before regulators stepped in. The Jakarta Composite Index closed 1.2% higher Friday.

“This should be seen less as blame and more as a reset,” said Mohit Mirpuri, senior partner at SGMC Capital Pte., an investment office. “Periods of stress often accelerate change, and this opens the door for fresh leadership with a clear mandate to raise standards, improve market structure and reinforce investor confidence.”

Sentiment had already begun to recover after regulators on Thursday outlined reform measures, including doubling minimum free float — the number of shares available for public trading — to 15% starting next month and possible market involvement by sovereign wealth fund Danantara. The efforts reflect a push by authorities to meet MSCI’s demands for greater transparency — failure to do so by May risks cutting Indonesia’s index weighting and even a downgrade to frontier status. 

HSBC Holdings Plc became the latest bank to downgrade Indonesian equities on concerns over growth. Goldman Sachs Group Inc. and UBS Group AG have both downgraded the market, with the former citing the risk of more than $13 billion in outflows triggered under an extreme scenario. 

This week’s episode has revived doubts over Indonesia’s financial markets, long viewed as a beneficiary of the nation’s rapid economic rise. Growing investor angst over public finances, the sudden departure of its finance minister and a widening fiscal deficit have already driven many investors to pull back. Global funds dumped Indonesian bonds from September to November, before returning in the final month of 2025. 

At the heart of concerns is the low free float of Indonesian equities, given the country’s biggest companies are thinly traded and controlled by a handful of wealthy individuals — a structure that investors say distorts the index and risks manipulation. The issue has been a point of contention for years, with investors arguing that such low liquidity in certain shares makes large portions of the market uninvestable and untrackable.

Exchange officials have already tried to incentivize market participants. Rachman, who was appointed his position as CEO less than four years ago, had pushed for extended trading hours and the introduction of short selling as ways to boost liquidity, though success has been limited. 

Currently, MSCI does not have a minimum free float requirement for a country’s market classification, which depends on factors such as accessibility and economic development. However, the index compiler does require a free float of 15% over a period of time for a security to be included in its investable emerging-market universe, with some exceptions.

In a statement earlier this week, MSCI raised worries over “opacity in shareholding structures and concerns about possible coordinated trading behavior” in Indonesia. It said it needs more granular and reliable information, including stronger monitoring, to support a better assessment of free float and investability across securities.

Many investors remain on edge for whether regulators will be able to do enough to satisfy the index compiler’s demands. “The reforms outlined are directionally positive, but execution and the appointment of a credible successor will be key to determining whether these concerns fully dissipate,” said Gary Tan, a portfolio manager at Allspring Global Investments.

So far this week, global funds offloaded a net $739 million dollar worth of stocks through Thursday, on track for the largest weekly outflow since mid-April. –BLOOMBERG

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ISTANBUL — Israel announced Friday it will reopen Gaza’s Rafah border crossing with Egypt in both directions starting Sunday, allowing limited movement of people, after two years of closure.

Anadolu Ajansi reported the Israeli army said the move comes as part of the ceasefire agreement in the besieged Gaza Strip.

“In accordance with the ceasefire agreement and the directive of the political echelon, the Rafah Crossing will open this coming Sunday (Feb. 1) in both directions for limited movement of people only,” the army said in a statement.

It added that exit from and entry into Gaza through the crossing will be coordinated with Egypt and subject to prior security clearance by Israel, under the supervision of a European Union mission.

The army said the reopening will also allow the return of residents who left Gaza during the war, following coordination with Egypt and after obtaining Israeli security approval.

There was no immediate comment from Palestinian or Egyptian authorities. — BERNAMA-ANADOLU

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TOKYO — The number of foreign workers in Japan reached a new high of over 2.57 million as of the end of last October, shattering the record for the 13th consecutive year, as the nation deals with a labour crunch, Kyodo News reported, citing government data.

The total of 2,571,037 marks an 11.7 per cent rise from the previous year, with Vietnamese workers accounting for the largest proportion.

The data comes as campaigning for the Feb 8 House of Representatives election draws attention to how to better integrate foreign residents, such as toughening rules for accepting them and promoting social cohesion.

The number of workplaces employing foreign nationals also hit a record high at 371,215, up 8.5 per cent from a year earlier, with small businesses with fewer than 30 employees accounting for 63.1 per cent of the total, according to the Ministry of Health, Labour and Welfare.

By industry, manufacturing led other sectors with 635,075 foreign employees, accounting for 24.7 per cent of them, followed by the services sector excluding food and drink services at 391,946.

The medical and welfare sector, including long-term care, saw the biggest growth of 25.6 per cent from the previous year.

Holders of the Specified Skilled Worker visa, which allows people from overseas to work in labour-strapped industries, rose 38.3 per cent to 286,225.

By nationality, Vietnamese workers made up the largest group at 605,906, or 23.6 per cent of the total, followed by Chinese at 431,949, or 16.8 per cent, and Filipinos at 260,869, or 10.1 per cent. — BERNAMA-KYODO

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