MSCI Again "Freezes" Review of Indonesian Stocks in May 2026, Here's Why

MSCI has again upheld its policy of freezing changes to the index for Indonesian stocks in the May 2026 review. This step is significant as it could hold back passive foreign fund flows that typically follow global index changes.

According to MSCI’s official announcement on 20 April 2026, the firm stated it is still assessing the effectiveness of capital market reforms implemented by the Financial Services Authority (OJK), the Indonesia Stock Exchange (BEI), and the Indonesian Central Securities Depository (KSEI).

These reforms encompass improvements in transparency for share ownership above 1%, more detailed investor classifications, the implementation of the High Shareholding Concentration (HSC) framework, and plans to increase the minimum free float limit to 15%.

Limited Adjustments Still Apply

However, until the evaluation is complete, MSCI has decided to continue with temporary policy (interim treatment). This means no additions of Indonesian stocks to the MSCI Investable Market Indexes (IMI), no increases in the Foreign Inclusion Factor (FIF), and no upgrades in stock classifications within index categories.

Nevertheless, MSCI can still make limited adjustments. Stocks falling into the high shareholding concentration (HSC) category may be removed from the index. Additionally, share ownership data above 1% can be used to adjust free float calculations.

Next Review in June 2026

MSCI also emphasised that new data from the market reforms will not be fully utilised in index calculations until the evaluation process is finished and feedback from market participants is obtained.

This decision aims to maintain index stability while minimising the risk of major changes (index turnover) before clarity on the implementation of new policies.

MSCI stated it will provide further updates in the Market Accessibility Review scheduled for June 2026.

Conclusion

MSCI remains cautious regarding Indonesia’s capital market reforms and has chosen to hold off on major index changes. This policy could restrain positive catalysts from foreign fund inflows in the short term. The direction forward will heavily depend on the outcomes of the evaluation scheduled for June 2026.