# Inside Indonesia's 'Deep-Fried Stocks': How Wash Trades Fed the MSCI Crisis > Behind Indonesia's threatened MSCI downgrade and a stock rout that has wiped out roughly $57 billion from the country's richest tycoons sits a long-tolerated pattern: small-cap 'gorengan' stocks whose prices are pumped through wash trading, including one obscure company that rallied nearly 5,000% in about seven weeks. - Source: South East Money - Canonical URL: https://southeastmoney.id/article/inside-indonesia-s-deep-fried-stocks-how-wash-trades-fed-the-msci-crisis - Author: Tim - Section: Markets - Published: 2026-11-02T12:04:37.368Z - Updated: 2026-11-02T12:04:37.368Z - Tags: Indonesia, MSCI, wash trading, Jakarta Composite Index, gorengan stocks, market manipulation, emerging markets --- Indonesia's threatened MSCI downgrade is not just a story about index weightings and foreign fund flows, it is also a story about how some of the country's wealthiest tycoons have long inflated the value of their own listed companies. Since MSCI first warned in January that Indonesia's equity market could be downgraded, the country's richest individuals have collectively lost an estimated $57 billion as the selloff that followed turned into, at one point, the worst two-day rout the market had seen in nearly three decades. ## A nearly 5,000% rally that drew scrutiny One case that has drawn particular attention involved an obscure, small-cap maker of an Asian delicacy product, whose share price rallied by close to 5,000% over roughly seven weeks before a research report flagged the move as implausible. A rally of that size, in that short a window, for a company with no obvious change in its underlying business, is the kind of pattern that points toward manipulated trading rather than genuine investor enthusiasm. ## A practice common enough to have its own name What makes Indonesia's situation distinct is how normalized this kind of stock manipulation has become. Traders in the market use the term 'gorengan,' Indonesian for something fried, or 'deep-fried stocks' in English, to describe small, thinly traded shares whose prices are artificially pumped, usually through wash trading, where related parties trade a stock back and forth to manufacture the appearance of volume and rising demand. That the market has its own established slang for this behavior suggests it has been tolerated, or at least widely understood, for far longer than this year's crisis has been unfolding. ## Why this validates MSCI's concerns This pattern gives concrete shape to the kind of structural concerns MSCI has cited in weighing Indonesia's market classification: opacity around shareholding structures and suspected coordinated trading behavior. A wash-trading scheme tied to specific tycoons and specific stocks is exactly the sort of investability problem that turns an index provider's governance concerns from an abstract worry into a documented pattern, and it helps explain why MSCI's review has escalated rather than been resolved quietly. ## Authorities move, with the outcome still unclear Jakarta has responded by going after tycoons allegedly behind these gorengan shares, and Indonesian markets have seen periods of rebound as authorities stepped up their response through the back half of the year. Indonesia's main equity gauge is still down roughly 38% for the year, among the worst performers of any major index Bloomberg tracks, and questions persist over whether the regulatory fixes announced so far go deep enough to address a practice this entrenched, or whether this episode simply exposed it more publicly than usual without actually ending it. --- Originally published by South East Money. Free to cite with attribution and a link to https://southeastmoney.id/article/inside-indonesia-s-deep-fried-stocks-how-wash-trades-fed-the-msci-crisis.