MSCI Retains Indonesia's Emerging Market Status, Final Decision on 24 June 2026 Seen as Catalyst for IHSG
Morgan Stanley Capital International (MSCI) has retained Indonesia’s status as an Emerging Market in its Global Market Accessibility Review 2026. Out of 18 market accessibility indicators assessed, only the ‘Information Flow’ indicator was downgraded from ‘+’ to ‘-’, while the remaining 17 indicators were unchanged compared to 2025.
The downgrade in the Information Flow indicator was attributed to limited transparency in share ownership structures and concerns over coordinated trading practices that could disrupt fair price discovery. Notably, the ‘FX Market Liberalization’ indicator had already been rated ‘-’ since the 2025 review and saw no further change.
Indonesia maintained a ‘++’ rating on eight key indicators, including Investor Qualification Requirement, Foreign Ownership Limits, Foreign Room, Capital Flow Restrictions, Investor Registration & Account Setup, Market Regulations, Trading, and Size & Liquidity. On the Foreign Ownership Limits and Foreign Room indicators, Indonesia’s ‘++’ rating outperformed both China and India, which received ‘-’ ratings.
MSCI uses three main pillars to determine market classification: Economic Development, Size & Liquidity, and Market Accessibility. Indonesia has 11 stocks that meet the size and liquidity qualification criteria, far exceeding the minimum requirement of one stock to maintain Emerging Market status. This suggests that the downgrade of a single accessibility indicator is insufficient to trigger a reclassification.
The Composite Stock Price Index (IHSG) closed at 6,172.34 on 18 June 2026, with a market P/E ratio of 10.15x, below the five-year historical average range of 11.45x–13.87x, indicating historically cheap valuations. Foreign investors have recorded net sales of nearly Rp80 trillion year-to-date, reflecting global investor caution partly attributed to uncertainty over MSCI classification.
The official MSCI classification decision is scheduled for announcement on 24 June 2026. With 17 of 18 indicators unchanged and Indonesia’s strengths in market size, liquidity, and foreign ownership openness compared to other Emerging Markets, confirmation of its status is expected to remove a significant source of pressure on the Indonesian stock market. Stocks such as PT Bank Central Asia Tbk (BBCA), PT Bank Mandiri Tbk (BMRI), and PT Telkom Indonesia Tbk (TLKM) are among the 11 Indonesian shares meeting MSCI’s size and liquidity qualification requirements. Ongoing transparency reforms, including enhanced issuer information disclosure and OJK supervision of share ownership structures, demonstrate Indonesia’s commitment to addressing MSCI’s concerns regarding Information Flow.