MSCI Moves to Drop Indonesia From Global Indexes as Jakarta Stocks Sink 30%
Updated
Updated · Reuters · Oct 15
MSCI Moves to Drop Indonesia From Global Indexes as Jakarta Stocks Sink 30%
3 articles · Updated · Reuters · Oct 15
Summary
MSCI said Indonesia no longer merits emerging-market status and plans to reclassify it as “standalone,” a move that would remove its stocks from global indexes tracked by billions of dollars.
The index provider said reforms have not made enough progress and that “significant concerns” over market dysfunction, ownership opacity and trading behavior are too severe even for a frontier-market downgrade.
April 2027 is the deadline for market feedback, with a final decision due by June 2027 unless MSCI sees clear improvement in market governance and function.
Indonesia’s benchmark stock index has fallen more than 30% this year and foreign investors have been net sellers of $4.7 billion, while the exchange said it has taken steps to improve transparency and integrity.
The proposed downgrade adds to a difficult year for Indonesia, after Moody’s and Fitch cut their sovereign outlooks to negative over concerns about policymaking credibility.
Why do global investors consider Indonesia's market severely dysfunctional despite new transparency laws, and what hidden behaviors triggered MSCI's ultimatum?
Could MSCI's unprecedented threat to isolate Indonesian equities trigger a fatal capital flight that cripples the nation's broader economy?