MSCI Announcement Today! OJK, Exchange, and Danantara Speak Out

Jakarta, CNBC Indonesia — Market participants are preparing to face the announcement of the Morgan Stanley Capital International (MSCI) index review results scheduled for Tuesday (12/5/2026), amid concerns over the potential decline in Indonesia’s weighting in the global index.

MSCI will announce the results of its review of several global indices, ranging from MSCI Global Standard Indexes, MSCI Global Small Cap, MSCI Micro Cap Indexes, to MSCI Frontier Markets Small Cap Indexes. Meanwhile, the rebalancing implementation will take effect on 29 May 2026.

Ahead of the announcement, regulators to market players unanimously assess that Indonesia’s capital market reforms could indeed trigger short-term pressures but are believed to have positive impacts in the long term.

Otoritas Jasa Keuangan (OJK) Commissioner Chair Friderica Widyasari Dewi stated that her side is still awaiting the MSCI announcement results, while emphasising that the capital market reform steps taken by the regulator are part of efforts to strengthen market integrity.

“Even if there is short-term adjustment, we see this as short-term pain. But, God willing, long-term gain,” Friderica said at the Indonesia Stock Exchange (BEI) building on Monday (11/5/2026).

She acknowledged that MSCI had previously implemented a freeze, limiting opportunities for new stocks to enter the index, while existing stocks could face adjustments.

OJK also hopes that Indonesia will remain in the emerging market category in the next MSCI review in June 2026, amid issues of potential downgrade to frontier market status.

According to Friderica, the quality of information disclosure and Indonesia’s capital market integrity continues to improve and is one of the best regionally.

In line with OJK, the Indonesia Stock Exchange also acknowledges the potential decline in Indonesia’s weighting in MSCI in the short term if no new stocks enter the index.

BEI Acting Director Jeffrey Hendrik stated that the reform steps taken by BEI are in line with MSCI’s approach to stocks with high shareholder concentration (HSC).

Previously, BEI had removed several HSC category stocks from the IDX80, LQ45, and IDX30 indices.

“If that is done by MSCI and no new stocks enter MSCI, in the short term Indonesia’s weighting might drop. But that is short-term pain for long-term gain,” Jeffrey said.

BEI emphasised that capital market reforms will continue, including encouraging issuers to increase free float to meet global standards.

MSCI had previously highlighted several aspects of Indonesia’s capital market reforms, from increasing the minimum free float to 15%, transparency of shareholder data above 1%, to improving market governance quality.

On the other hand, Danantara Chief Investment Officer Pandu Sjahrir believes the market does not need to worry too much about the 12 May 2026 MSCI announcement. According to him, BEI has implemented various improvement steps previously requested by MSCI.

“Let’s just wait. It should all be included. I’ve seen the developments, the exchange is good in terms of the implementations being carried out. God willing, it will be fine,” Pandu said.

He also believes the IHSG weakening on Monday’s trading was more influenced by global sentiments such as rupiah movements rather than MSCI factors.

Ahead of the MSCI announcement, the IHSG experienced a correction of more than 1% at the start of Monday’s trading before trimming the decline. At the close of trading, the IHSG settled at 6,905.62, down 63.78 points or -0.92%.

Meanwhile, Mandiri Sekuritas assesses that the pressure on the Indonesian stock market throughout this year is more influenced by increasing foreign investor risk aversion towards emerging markets.

Mandiri Sekuritas Equity Research Kresna Hutabarat said foreign investors have not fully exited Indonesia but are rotating assets from stocks to government bonds.

In the last two months, foreign fund flows have actually been recorded entering the domestic bond market.

Nevertheless, Mandiri Sekuritas maintains its IHSG target at 9,050 by the end of 2026, although opening the possibility of revision due to global risks and profitability pressures.

Kresna also believes that the capital market reforms carried out by OJK have the potential to become a catalyst for the recovery of banking and consumer stocks, which have been the most pressured by foreign selling actions.

According to him, there is a discrepancy between the relatively cheap fundamentals of the Indonesian stock market and the cautious stance of foreign investors who are still following the MSCI index composition.

Amid this foreign pressure, domestic retail investors have become the main pillar of the national stock market with an ownership portion now reaching around 50%.