JAKARTA \u2014 Mirae Asset Sekuritas Indonesia says a proposal by Morgan\nStanley Capital International (MSCI) to change the classification of\nIndonesia\u2019s stock market could put pressure on the bond market by\naffecting sentiment and foreign capital flows. The global review has\ndrawn serious attention from domestic financial industry players.<\/p>\n
Jessica Tasijawa, a fixed-income analyst at Mirae Asset Sekuritas\nIndonesia, said in a statement in Jakarta on Monday (19 October 2026)\nthat pressure on the share market could spread to government securities\nif global investors reduce their exposure to Indonesian financial\nassets. The situation calls for heightened vigilance among\nstakeholders.<\/p>\n
The shift in sentiment could also put pressure on the rupiah. Foreign\ninvestors selling domestic assets may convert the proceeds into foreign\ncurrencies, adding to pressure on the rupiah.<\/p>\n
Further rupiah weakness could constrain Bank Indonesia\u2019s scope to\nease monetary policy. This could prevent government bond yields from\nfalling, even if global markets improve.<\/p>\n
Jessica noted that the yield on 10-year government bonds briefly\nreached 7.33 per cent at the market opening. She said rising government\nbond yields amid falling US Treasury yields indicated additional\npressure from domestic factors.<\/p>\n
\u201cAn increase in the 10-year government bond yield to 7.24 per cent\nwhen US Treasury yields were previously falling also points to\nadditional domestic pressure. One factor to watch is currency risk. If\nsentiment towards MSCI deteriorates and prompts investors to reduce\ntheir holdings of domestic assets, converting the proceeds into foreign\ncurrencies could add to pressure on the rupiah,\u201d Jessica said.<\/p>\n
On 15 October 2026, MSCI began a consultation on a proposal to\nreclassify Indonesia\u2019s stock market from an emerging market to a\nstandalone market. The strategic move has become a major talking point\namong economists.<\/p>\n
The proposal comes amid concerns about share-ownership transparency,\nfree-float quality and alleged coordinated trading activity. These\ngovernance issues are a key focus for the global index provider.<\/p>\n
A final decision is scheduled no later than the end of June 2027.\nMarket participants are closely monitoring developments throughout the\nconsultation.<\/p>\n
Rully Arya Wisnubroto, head of research and chief economist at Mirae\nAsset Sekuritas Indonesia, said the reclassification could have\nlong-term consequences for the domestic capital market, including\nIndonesia\u2019s position in global equity indices and its access to\ninternational institutional investors. Domestic market valuations, he\nsaid, depend heavily on regulatory certainty.<\/p>\n
If Indonesia is removed from emerging-market indices tracked by\nglobal investment products, passive investors following those indices\ncould sell. Active institutional investors may also adjust their\nallocations.<\/p>\n
\u201cThe risk is not only the amount of foreign capital that could leave.\nOver the longer term, this reclassification could narrow the\ninstitutional investor base, reduce market liquidity and increase the\nrisk premium investors demand to invest in Indonesian shares. In other\nwords, the impact could extend well beyond the selling pressure we are\nseeing now,\u201d Rully said.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/mirae-asset-says-msci-proposal-risks-pressuring-bond-market-1792399878", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }