MSCI Rebalancing Sees Indonesian Stocks Dropped, Raising Concerns Over Foreign Outflows

The removal of two major Indonesian companies from MSCI’s Global Standard Indexes could trigger an estimated total outflow of US$753 million (approximately Rp 13.45 trillion) from the domestic market, according to an analyst. Phintraco Sekuritas analyst Desy Erawati stated that the changes, which see PT Charoen Pokphand Indonesia Tbk (CPIN) and PT GoTo Gojek Tokopedia Tbk (GOTO) dropped from the MSCI Global Standard Indexes, are expected to result in outflows of around US$684 million from the Standard Cap and US$68 million from the Small Cap indexes. CPIN has been moved to the MSCI Small Cap Indexes.

Erawati noted that the rebalancing will reduce Indonesia’s weight in the MSCI Emerging Markets Investable Market Index (EM IMI). Despite this, she highlighted that upcoming catalysts such as the release of US Consumer Price Index data and the Indonesian President’s state address on the 2027 budget could influence the Jakarta Composite Index, which is expected to test resistance at 6,400.

Analyst Hendra Wardana from Stocknow described the removal of GOTO and the downgrade of CPIN as a serious warning for the domestic capital market. He argued that the issue extends beyond the number of listed companies to the quality of liquidity and investability. Wardana emphasized that while Indonesia pushes for regulatory reforms like increased free float and better governance, the loss of representation in key global indexes indicates that these reforms have not yet created a deeper, more liquid market. He stressed that market development must focus on demand and liquidity, not just the supply of new listings, to ensure stocks can absorb large-scale institutional transactions.