Observer: MSCI classification review should be momentum for reform acceleration

Jakarta (ANTARA) - Capital market observer David Sutyanto believes that the notes provided by MSCI in the 2026 Market Classification Review must serve as momentum to accelerate reforms in the Indonesian capital market.

Speaking to ANTARA in Jakarta on Wednesday, David stated that the results of the market classification review should be interpreted proportionally. Indonesia remains classified as an Emerging Market, meaning there has been no change in status. However, MSCI has provided significant notes regarding the transparency of share ownership, the validity of free floats, and allegations of coordinated trading, which are deemed to potentially affect the perception of Indonesia’s investability.

“In my opinion, these notes should be a momentum to accelerate capital market reforms,” said David, who is also the General Chair of the Indonesian Securities Analyst Association (AEI).

He assessed that several steps already announced by regulators are moving in the right direction, such as the disclosure of shareholder data for holdings above 1 per cent, more detailed investor classification, the High Shareholding Concentration framework, and the roadmap to increase the minimum free float to 15 per cent.

“The challenge now is to ensure that implementation is consistent, measurable, and its impact is visible to global investors,” said David.

Regarding the deadline of November 2026 to prove progress in Indonesia’s capital market reforms, David believes there is still sufficient time, though it is relatively tight. Therefore, he noted that what is required is not just regulations, but evidence of implementation.

If reforms in transparency, surveillance, and enforcement run effectively, David believes the opportunity for Indonesia to maintain its Emerging Market status remains open.

“The most important thing is to maintain the trust of global investors through a market that is increasingly transparent, liquid, and credible,” said David.

On Wednesday (23/6) US time, global index provider MSCI released the results of its 2026 market classification review. MSCI acknowledged the transparency reforms announced by the Financial Services Authority (OJK), the Indonesia Stock Exchange (BEI), and the Indonesia Central Securities Depository (KSEI).

This recognition includes the increased disclosure of shareholders with holdings above 1 per cent, more detailed investor classification, the introduction of the High Shareholders Concentration (HSC) framework, and the roadmap to increase minimum free float requirements to 15 per cent.

“While these announcements are a step in the right direction, what is important for international institutional investors is the consistent implementation and the sustained effect of these measures across the market,” wrote MSCI.

On the other hand, MSCI stated it will continue to assess the scope, consistency, and sustained effectiveness of the Indonesian capital market, in the context of determining free floats and broader investability assessments, which will remain under observation until the MSCI Index Review in November 2026.

“If adequate progress is not visible by the November 2026 MSCI Index Review, MSCI will consider various options for appropriate treatment for the Indonesian market, potentially including consultation regarding the reclassification of Indonesia from Emerging Market to Frontier Markets,” wrote MSCI.