JAKARTA \u2014 Capital market analyst Hans Kwee says Morgan Stanley\nCapital International\u2019s (MSCI) proposal to downgrade Indonesia\u2019s capital\nmarket to Standalone Market contrasts with FTSE Russell\u2019s assessment.\nThe latter has retained Indonesia\u2019s status as a Secondary Emerging\nMarket.<\/p>\n
\u201cMSCI\u2019s consultation announcement feels at odds with, and does not\nalign with, the objective recognition given by other global index\nproviders such as FTSE,\u201d Hans said in a statement received in Jakarta on\nFriday (16 October 2026). His comments highlighted differences in\nopinion among global index providers.<\/p>\n
According to Hans, FTSE Russell responded positively to capital\nmarket reforms carried out by the Financial Services Authority (OJK)\ntogether with self-regulatory organisations (SROs). Their strong\nco-operation was seen as having helped maintain international investor\nconfidence.<\/p>\n
In its annual review announced on 6 October 2026, FTSE Russell kept\nIndonesia in the Secondary Emerging Market category and did not place it\non a watchlist for a possible classification change. The decision\nreflects the stability of the domestic financial market.<\/p>\n
\u201cWe have seen for ourselves how positively FTSE Russell has responded\nto the reform measures implemented by the OJK and SROs,\u201d he said.\nImprovements in governance have continued to earn recognition from the\nglobal financial community.<\/p>\n
Hans said the MSCI proposal was not commensurate with the size,\nliquidity and depth of Indonesia\u2019s capital market. Strong economic\nfundamentals, he said, were a key support for the resilience of the\ndomestic exchange.<\/p>\n
\u201cIn our view, concerns or proposals regarding Standalone Market\nstatus are unfounded and do not reflect the reality of our capital\nmarket,\u201d he said. The domestic market, he added, remained highly\nattractive to investors.<\/p>\n
He said Indonesia had nine shares meeting the criteria for the MSCI\nStandard Index, exceeding the minimum requirement of three shares used\nas one quantitative benchmark for Emerging Market classification. This\nshowed that local shares had adequate liquidity.<\/p>\n
However, the number of shares is not the sole basis for\nclassification, as MSCI also assesses investor accessibility and market\nfunctioning. The comprehensive review covers a range of technical\ntrading considerations.<\/p>\n
Hans also said the strength of the domestic economy supported\nIndonesia\u2019s eligibility to remain an emerging market, citing economic\ngrowth of more than 5 per cent. This macroeconomic performance bolsters\nmarket participants\u2019 optimism.<\/p>\n
Nevertheless, Hans explained that MSCI\u2019s announcement was not a\ndecision to downgrade Indonesia, but the launch of a public consultation\nfollowing its June 2026 assessment. The process still leaves room for\nconstructive dialogue.<\/p>\n
MSCI is accepting feedback until 30 April 2027 and will announce its\nfinal decision no later than 30 June 2027. Until any classification\nchange is made, Indonesia remains in the Emerging Market category.<\/p>\n
In its official announcement, MSCI raised concerns about unclear\nshare-ownership structures, suspected coordinated trading and\ninsufficient evidence of meaningful enforcement of rules. These issues\nwill form part of the evaluation for the exchange authorities.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/analyst-says-msci-proposal-does-not-reflect-capital-market-realities-1792230633", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }