Post-MSCI Rebalancing, OJK Aims to Elevate Indonesia's Capital Market from Emerging Market Status
Following the MSCI May 2026 Index Review announced on 12 May 2026, six Indonesian stocks were removed from the MSCI Global Standard Index: AMMN, BREN, TPIA, DSSA, CUAN, and AMRT. These changes take effect after the close of trading on 29 May 2026 and will be reflected in trading from 1 June 2026. Although several Indonesian stocks exited the main MSCI index, the Financial Services Authority (OJK) confirms that Indonesia retains its status as an Emerging Market in the global MSCI classification.
OJK Targets Indonesia’s Capital Market for Upgrade
OJK’s Executive Head of Capital Market Supervision, Hasan Fawzi, stated that the regulator aims to propel Indonesia’s capital market to a higher classification in the long term through reforms in integrity and market deepening. “We do not want to merely maintain our emerging market status. In the future, Indonesia’s capital market has the potential to rise to a higher classification,” said Hasan. According to him, the reforms undertaken by OJK alongside Self-Regulatory Organisations (SROs) are not just in response to the MSCI evaluation but also to strengthen the overall quality of the national capital market.
OJK’s Focus on Capital Market Reforms
Several key areas of capital market reform promoted by OJK include: increasing share ownership transparency; improving the quality of issuers’ free float; strengthening market integrity; expanding market depth; enhancing issuer governance; and attracting more global investors.
OJK Seeks Greater Credibility for Indonesia’s Capital Market
Hasan explained that one primary focus of the reforms is to boost share ownership transparency and the quality of issuers’ free float. These steps ensure that global investors and international index providers have more accurate data to assess Indonesian stocks. OJK has opened up data on share ownership above 1%, raised the minimum free float threshold to 15%, and released data on high shareholding concentration.
According to Hasan, these measures are crucial for enhancing the credibility and investment appeal of Indonesia’s capital market. “A transparent capital market will be more trusted by global investors,” he said.
Many Indonesian Stocks Still Poised to Enter MSCI
OJK also revealed that numerous Indonesian stocks have the potential to join the MSCI indices, either in the small cap or standard categories. However, some are held back by MSCI’s temporary freeze policy on adding Indonesian stocks. Hasan noted that some stocks exiting the MSCI Small Cap did so because their market capitalisation and criteria had improved, but they could not upgrade due to the freeze.
In general, stocks likely to enter MSCI indices typically meet criteria such as: large market capitalisation; high trading liquidity; adequate free float; share ownership transparency; good corporate governance; and consistent performance and trading activity.
OJK stated it will continue to encourage issuers to improve free float quality, transparency, and governance so that more Indonesian stocks can enter global indices in the future.
OJK Deems IHSG Valuation Still Attractive
In addition to sustaining capital market reforms, OJK assesses that the current valuation of Indonesian stocks remains relatively attractive compared to regional exchanges. According to Hasan, the price-to-earnings ratio (PER) of the IHSG is currently around 16 times, lower than several other regional stock markets. OJK hopes investors will capitalise on the selective market correction momentum to accumulate stocks with strong fundamentals.
Key Notes for Investors
Several points of note for investors regarding MSCI and Indonesia’s capital market: Indonesia’s status remains in the MSCI Emerging Market; MSCI rebalancing may affect short-term foreign fund flows; transparency reforms are viewed positively for the long term; liquidity and free float are primary concerns for global investors; OJK considers the IHSG valuation competitive regionally.
Specifically for AMRT, the Alfamart network operator’s stock is not fully exiting MSCI as it has entered the MSCI Indonesia Small Cap Index.
Conclusion
OJK views Indonesia’s capital market reforms as essential steps to improve transparency, integrity, and the quality of the domestic stock market. Although several stocks exited MSCI in the May 2026 review, Indonesia maintains its Emerging Market status. In the long term, OJK targets an upgrade for Indonesia’s capital market and stronger global competitiveness.