(Oct 21): Temasek Holdings Pte Ltd and GIC Pte Ltd denied claims by a former Indonesian trade minister that Singapore’s two biggest state-owned investors helped instigate Indonesia’s recent stock market collapse.
MSCI Inc last week said it expects to remove Indonesia from its global indices barring major improvements in market governance, sending local stocks tumbling by the most since the Asian Financial Crisis in 1998.
Former Indonesian trade minister Muhammad Lutfi said on social media that Temasek and GIC had a major influence over MSCI and were being used by Singapore to push the index provider on Indonesia.
“They’re pressuring MSCI to threaten to downgrade Indonesia to standalone market status, creating mass panic so that our stock index collapses,” he said in a video posted to Instagram. “Then they can buy back Indonesia’s best assets at discounted prices.”
Lutfi’s accusations “have no basis and are patently untrue”, Wai Hoong Fock, Temasek Global Investments’ head of Asia-Pacific excluding China and India, said in response to questions at a tech industry briefing in Singapore. “No one from Temasek, either the institution or the individuals working for the institution, have ever reached out to MSCI nor influenced any decisions they have ever made.”
A GIC spokesperson also denied the allegation and said the sovereign wealth fund had invested in Indonesia for more than 30 years.
“The allegations about GIC and our staff are untrue,” the fund said in a statement. “Our investment decisions are not driven by index classifications or top-down views of a market and instead by company- and asset-level fundamentals.”
MSCI didn’t immediately respond to a request for comment.
Indonesian officials are trying to prevent a downgrade, which MSCI is expected to decide on by June 30 next year. The Indonesia Stock Exchange said it will remove companies with highly concentrated ownership from the calculation of the benchmark index, following a meeting between exchange officials and MSCI representatives on Monday.
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