MSCI Could Lower Indonesia's Weighting, Stock Exchange Boss Says This

Jakarta, CNBC Indonesia — The Indonesia Stock Exchange (BEI) does not deny the potential for Morgan Stanley Capital International (MSCI) to reduce Indonesia’s index weighting from emerging market to frontier market status.

BEI’s acting CEO Jeffrey Hendrik stated that this potential realistically exists in the short term. According to him, several factors could prompt the global index provider to lower Indonesia’s weighting, despite ongoing improvements in transparency and governance.

“For example, one or two issues that might lead the global index provider to reduce the weighting in the short term. Yes, that potential exists. However, we are also very aware that what we have been doing to address the concerns of global index providers is for the long-term benefit of our capital market industry,” Jeffrey explained to reporters at the BEI building on Monday (6/4/2026).

With enhancements in transparency, market depth, and better governance, BEI believes Indonesia’s weighting will ultimately increase in the future. Jeffrey also acknowledged that this transitional phase could cause short-term market pressures.

On the other hand, domestic investors are said to be able to capitalise on this situation as an investment opportunity. He emphasised that investing in the capital market is fundamentally long-term, so short-term declines can serve as an entry point into the market.

“Certainly, domestic investors can use this moment as an opportunity. Yes, the essence of investing in the capital market is long-term investment. If we believe that the long-term potential is very good, then a short-term decline is certainly an opportunity,” he advised.

Previously, the Executive Head of Capital Market, Derivatives Finance, and Carbon Exchange Supervision at the Financial Services Authority (OJK), Hasan Fawzi, stated that OJK and BEI are preparing risk mitigation measures if the Composite Stock Price Index (IHSG) falls due to MSCI.

Hasan urged investors not to react reactively if a reduction in index weighting occurs. He admitted that the ongoing capital market reforms will have short-term impacts.

“This might involve portfolio adjustments by domestic or global investors, which could trigger temporary selling pressure, as well as potential outflows during rebalancing, followed by volatility and widening bid-ask spreads on certain stocks,” Hasan said during a virtual press conference on Monday (6/4/2026).

However, Hasan noted that these dynamics are transitional and temporary responses. They are part of unavoidable progress. The primary focus of capital market regulators is to build a foundation of market integrity that is transparent, credible, and consistently growing.