IHSG Braces for Crucial Week: MSCI Review and Hormuz Tensions in Focus
The Indonesian Composite Index (IHSG) and the rupiah are expected to remain volatile next week amid geopolitical uncertainty in the Middle East and anticipation of several key sentiments, including the MSCI announcement, US inflation data, and China’s interest rate decision.
The cancellation of peace talks between the United States and Iran, originally scheduled for Friday in Burgenstock, Switzerland, poses a significant external risk. The Swiss Foreign Minister confirmed the cancellation after the White House announced that Vice President JD Vance would not travel to Switzerland. The talks were intended as a follow-up to a virtual signing between President Donald Trump and President Masoud Pezeshkian regarding a 14-point peace memorandum. The failure of these negotiations could escalate tensions in the Strait of Hormuz, potentially driving the rupiah back towards Rp18,000 per US dollar if sentiment deteriorates further.
Domestically, the market is keenly awaiting the MSCI Classification announcement on 24 June 2026. The Chief Executive of Capital Market Supervision at the Financial Services Authority (OJK), Hasan Fawzi, stated that the OJK had recently held technical meetings with MSCI analysts to provide necessary data, particularly regarding transparency and share ownership in publicly listed companies. While the review is a routine assessment of market accessibility for all indices, the outcome is seen as a major catalyst for foreign fund flows into Indonesia.
This follows MSCI’s recent Global Market Accessibility Review, which downgraded Indonesia’s rating on the ‘Information Flow’ criterion from ‘+’ to ‘-’. MSCI cited concerns over opaque share ownership structures and indications of coordinated trading behaviour on the Indonesian bourse. The report noted that these issues hinder fair price discovery and make it difficult for global institutional investors to assess the true free float, thereby limiting their ability to reliably replicate indices or construct portfolios. Despite this downgrade, Indonesia retains its status as an Emerging Market in the 2026 review.