Jakarta, CNBC Indonesia \u2014 MSCI has announced plans to change the\nclassification of Indonesia\u2019s stock market from Emerging Market to\nStandalone Market. The proposal is still being consulted on with market\nparticipants, and a final decision will be announced no later than 30\nJune 2027.<\/p>\n
\u201cMSCI will announce its final decision at the end of June 2027 and\nmay provide an interim update on market participants\u2019 feedback during\nthe consultation period,\u201d the announcement said, as quoted on Friday (16\nOctober 2026).<\/p>\n
MSCI said it had opened a consultation on the proposed\nreclassification of the MSCI Indonesia Index. It may also issue an\ninterim update on feedback from market participants during the\nconsultation period.<\/p>\n
MSCI considers Indonesia\u2019s Emerging Market status no longer\nappropriate given current conditions in the domestic stock market. Its\nassessment is based on market participants\u2019 concerns about the\ninvestability of Indonesian shares, including the transparency of\nownership structures and alleged coordinated trading practices.<\/p>\n
In its market classification review in June 2026, MSCI said a number\nof market participants had raised significant concerns about investors\u2019\nability to invest in the Indonesian stock market transparently and\nefficiently.<\/p>\n
Indonesia\u2019s capital-market regulators have announced various reforms,\nincluding greater disclosure of shareholders with holdings above 1%,\nmore detailed investor classification disclosures, reporting on High\nShareholding Concentration (HSC), and a roadmap towards a minimum\nfree-float requirement of 15%.<\/p>\n
\u201cInstitutional investors have stressed the need for consistent\nimplementation and evidence of a sustained, material impact from these\nannouncements,\u201d MSCI said.<\/p>\n
However, MSCI said there had not yet been adequate and consistent\nprogress across the Indonesian stock market. Concerns about market\ndysfunction persist, including alleged coordinated trading practices and\na lack of evidence of enforcement having a significant impact.<\/p>\n
Market participants have told MSCI that sufficient progress has not\nyet been consistently demonstrated across the Indonesian stock market.\nDespite the announced reforms, significant concerns remain about market\ndysfunction, including continued alleged coordinated trading behaviour\nand a lack of evidence of meaningful enforcement.<\/p>\n
MSCI therefore considers Indonesia\u2019s Emerging Market classification\nno longer appropriate and has launched a consultation on a proposal to\nreclassify the country as a Standalone Market.<\/p>\n
MSCI has formally begun consulting on the proposed change to\nIndonesia\u2019s status as a Standalone Market. It also said that, based on\nfeedback from market participants, downgrading Indonesia to Frontier\nMarket status would not adequately reflect the extent of the problems in\nthe domestic stock market.<\/p>\n
MSCI expects to proceed with the reclassification plan unless the\nconsultation produces clear evidence of material improvements in market\ngovernance and functioning that could justify reconsidering the\ndecision.<\/p>\n
In line with the announcement, MSCI said it would maintain a freeze\non certain index-related changes for Indonesian shares until further\nnotice.<\/p>\n
Under the policy, MSCI will not implement increases to the Foreign\nInclusion Factor (FIF) or Number of Shares (NOS). It will also not add\nshares to the MSCI Indonesia Investable Market Index (IMI), or move\nshares into index segments with higher market-capitalisation\nthresholds.<\/p>\n
FIF is the factor MSCI uses to determine the proportion of a\ncompany\u2019s shares available to foreign investors for index calculations.\nNOS refers to the number of shares used in those calculations.<\/p>\n
MSCI also confirmed that it would continue removing shares identified\nby Indonesian authorities under the HSC framework.<\/p>\n
In addition, disclosures of shareholders with holdings above 1% will\ncontinue to be used to adjust free-float estimates.<\/p>\n
MSCI is inviting market participants to submit feedback on the\nproposed reclassification of the Indonesian index until 30 April 2027. A\nfinal decision on the classification change will be announced on or\nbefore 30 June 2027.<\/p>\n
The consultation\u2019s outcome will be an important factor in MSCI\u2019s\ndecision on whether Indonesia can retain its Emerging Market status or\nshould be reclassified as a Standalone Market.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/msci-may-downgrade-indonesias-stock-market-classification-1792111858", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }