18 Indonesian Stocks Exit MSCI: How OJK is Protecting Your Insurance Funds
The Financial Services Authority (OJK) is tightening investment supervision to ensure customer funds remain secure after dozens of domestic stocks were removed from global indices. This new strategy focuses on monitoring active portfolios to prevent potential systemic losses.
A wave of global portfolio adjustments has once again shaken the domestic capital market. Many parties are questioning the sudden and significant removal of Indonesian stocks from the MSCI index.
This condition immediately triggered a rapid response from Indonesia’s highest financial regulator. The OJK is now intensively shifting its supervisory focus towards the asset management practices of the national insurance industry.
Effective 29 May 2026, following the close of trading, the Morgan Stanley Capital International (MSCI) index will officially implement its periodic rebalancing. This decision directly impacts the position of domestic equity instruments. It has been recorded that 18 Indonesian stocks will exit the MSCI during this adjustment period, making capital outflows from global passive funds unavoidable.
The market situation is becoming increasingly challenging as pressure comes from more than just one index provider. Almost simultaneously, the domestic exchange is preparing for sentiment from Europe, as FTSE Russell prepares its periodic review in June 2026. This evaluation further restricts the movement of certain market-cap stocks, with 8 Indonesian stocks recently removed from the FTSE Global Equity Index Series (GEIS).
The scale of this reshuffle is massive given the significant influence of both institutions on the international financial stage. Changes to their portfolios often trigger a domino effect in emerging markets. The FTSE Global Equity Index Series covers over 19,000 stocks across 49 developed and emerging nations, with billions of US dollars in global passive funds using these indices as primary investment benchmarks. When a stock is removed, passive funds are required to sell their holdings automatically, leading to structured mass selling that pressures stock prices during the rebalancing process. This decline has the potential to erode the book value of investment instruments held by local financial institutions.
Why is insurance investment supervision becoming critical now? The impact of stocks exiting the MSCI is directly related to the decline in the net asset value managed by insurers. Both life and general insurance companies in Indonesia allocate a portion of customer premiums into equity instruments.
The Chief Executive of the OJK’s Supervision of Insurance, Guarantee, and Pension Funds, Ogi Prastomiyono, emphasised that the government is not remaining idle. A thorough investigation into risk exposure is currently underway. “We are studying more deeply the impact of the decline in investment value on insurance companies—identifying who is affected, who holds the removed MSCI stocks, and the total value involved,” he stated.
This deep evaluation marks a turning point in the history of non-bank financial industry supervision. The regulator acknowledged that past gaps need to be addressed to ensure public safety. Previously, supervision tended to focus on the downstream business—such as product sales and claims—without scrutinising the ‘internal kitchen’ of fund management. “What we have not done until now relates to how insurance companies invest their portfolios. Previously, we only supervised products, policy sales, and claims; we never looked at the investments in between,” Prastomiyano explained.
This paradigm shift in supervision is expected to detect potential defaults at an early stage. Regulators are now moving deeper into the realms of capital allocation and internal risk management. This new focus stems from the hard lessons learned from the collapse of several large insurance entities in recent years, where improper fund placement was a primary cause of insolvency. Through this strict supervision, the OJK aims to ensure that fund managers apply high principles of prudence and are prohibited from engaging in short-term speculation for high returns.