27 Percent Chance MSCI Could Downgrade Indonesian Stock Exchange Status

Tae Yong Shim, Managing Director of PT Samuel Tumbuh Bersama, stated that there is a possibility that the global index provider, Morgan Stanley Capital International (MSCI), could downgrade the Indonesian stock exchange to a frontier market. However, he noted that the probability remains low.

MSCI’s assessment has previously sparked concerns regarding a potential downgrade from emerging market to frontier market status. “The probability is only 27 per cent. In my view, the chance is very small,” Shim said during the Media Connect event by Samuel Sekuritas Indonesia in Jakarta on Friday, 3 July 2026.

This projection refers to data from the global market prediction platform, Polymarket. Nevertheless, he personally believes the actual probability could be even lower. “I believe the probability of Indonesia being downgraded to a frontier market is less than 10 per cent, specifically 9 per cent, and the issues related to MSCI have been handled well,” he added.

Previously, in the Market Classification Review released on 24 June 2026, MSCI decided to maintain Indonesia’s stock exchange status at the emerging market level. However, MSCI has set a deadline for a review assessment until November 2026 before making a subsequent decision.

Issues regarding the transparency of share ownership in Indonesia have been a focus for the global institution, which previously led MSCI to issue an early warning by temporarily freezing the assessment of the Indonesian stock index.

According to Shim, MSCI’s assessment of Indonesia is too harsh. He noted that the June release indicated the assessment is not yet fully secure, despite the Indonesian government and Self-Regulatory Organisations (SROs) making efforts to reform the capital market. These efforts include releasing regulations for disclosing share ownership above 1 per cent and setting a minimum free float requirement of 15 per cent.

Shim argued that the minimum free float percentage is too high. He compared this to Elon Musk’s company, SpaceX, which only provides 3 per cent of its total shares to the public. “The free float is only 3 per cent. Would Elon Musk’s SpaceX be listed in Indonesia? It wouldn’t be possible, would it? Because our minimum requirement is 15 per cent,” he remarked.

Previously, the Financial Services Authority (OJK) promised to strengthen capital market reforms in response to the MSCI review results. Hasan Fawzi, the OJK Executive Head of Capital Market, Derivatives, and Carbon Exchange Supervision, appreciated MSCI’s decision to continue monitoring and assessing Indonesia’s capital market reform agenda.

Hasan stated that the OJK and capital market SROs will continue to communicate reform efforts to global index providers and investors. “We believe the Indonesian capital market remains very prospective and attractive, both for domestic and global investors. This is supported by maintained domestic economic fundamentals, a growing investor base, competitive stock valuations, and generally very positive fundamental performance of issuers,” he said.