MSCI Downgrades Indonesia's Information Flow Rating, Highlights Transparency Concerns

MSCI has downgraded Indonesia’s assessment on the information flow criterion to negative in its 2026 global market accessibility review, amid concerns over transparency of share ownership structures and indications of coordinated trading in the Indonesian stock market. In its report, MSCI stated that the downgrade reflects issues with the openness of ownership data and limited market activity, which hinder proper price formation and restrict global investors’ ability to assess the free float of listed companies. MSCI also reiterated key risks in the Indonesian market, including limited ownership transparency and signs of coordinated trading. “There is no efficient offshore currency market and there are restrictions in the onshore currency market in Indonesia,” MSCI wrote, noting that foreign exchange liberalisation remains limited. The Indonesian capital market has been under pressure since January, when MSCI first highlighted transparency issues and warned of a potential downgrade from emerging to frontier market status. That warning was said to potentially trigger capital outflows of up to US$13 billion. Since the start of the year, the benchmark stock index in Jakarta has fallen more than 27% in 2026, making it the worst-performing market globally. Foreign investors have also offloaded Indonesian equities worth approximately US$3.76 billion so far this year. In the same period, the heads of the stock exchange and the regulator resigned on the same day. MSCI also extended its review of the Indonesian market in April, then in May removed six companies, mostly linked to conglomerate groups, from its indices, further pressuring the stock market. Meanwhile, for South Korea, MSCI said the country has continued reforms introduced in recent years, but fundamental issues regarding market accessibility remain unresolved.