Analyst: No Reason Yet for MSCI to Downgrade Indonesia to Frontier Market
Jakarta, CNBC Indonesia — MSCI released its Global Market Accessibility Review 2026 on Friday (19/6/2026). In this year’s cycle report, MSCI noted more upgrades than downgrades among the Emerging Markets group. However, Indonesia was one of two developing countries that experienced a decline in assessment due to concerns over less transparent share ownership structures and indications of coordinated trading activity deemed to disrupt the price formation process.
Associate Director of Pilarmas Investindo Sekuritas, Maximilianus Nicodemus, said this was in line with market participants’ expectations. According to him, there is no reason for Indonesia to be downgraded from its emerging market status. "With good economic growth prospects, despite rising risks, we believe Indonesia still deserves to be there," he told CNBC Indonesia on Friday (19/6/2026). Nevertheless, he added that it would be wise to make improvements promptly to maintain market participants’ confidence. "So that they do not become truly reluctant to leave Indonesia," he said.
Regarding the upcoming announcement on 24 June 2026, he remains quite optimistic for now. "So we should still be in the same class," he added. However, what should be more concerning is the S&P Rating, which could impact market movements if downgraded.
Meanwhile, Doosan Financial Sekuritas analyst Lukman Leong said that regarding the MSCI results, there are several points of concern. However, these are considered normal and the likelihood remains greater that Indonesia will retain its emerging market status. As for transparency regarding shareholders, ultimate beneficial ownership (UBO), and free float, these are indeed primary concerns for foreign investors. They want to ascertain who the actual owner of a company is and what portion of shares are genuinely circulating and tradable in the market. "If the recorded free float turns out not to be fully independent or the ownership structure is less transparent, institutional investors will assess the market’s liquidity and governance as riskier," he told CNBC. However, for domestic and retail investors, this issue is generally less of a concern compared to price prospects, business performance, earnings, or dividends. For more experienced investors, ownership transparency remains important as it can help assess the quality of corporate governance and reduce the risk of affiliated parties dominating share movements.