{"id":2776,"date":"2026-10-16T11:04:21","date_gmt":"2026-10-16T06:04:21","guid":{"rendered":"https:\/\/ipp-news.com\/?p=2776"},"modified":"2026-10-16T11:04:21","modified_gmt":"2026-10-16T06:04:21","slug":"msci-plans-to-remove-indonesia-from-global-indexes","status":"publish","type":"post","link":"https:\/\/ipp-news.com\/?p=2776","title":{"rendered":"MSCI plans to remove Indonesia from global indexes"},"content":{"rendered":"
\n

Indonesia\u2019s stock market is no longer worthy of \u201cemerging market\u201d status, according to MSCI, and the index provider said it intends to \u200ccut it from a suite of products tracked by global investors. This major setback sent money fleeing.<\/strong><\/p>\n

In a surprise move, MSCI said on Friday it would put Indonesia on a path to \u201cstandalone\u201d status, which was worse than previously flagged, and extended its review of the market by seven months to June 2027.<\/p>\n

Jakarta stocks, already the world\u2019s worst performers this year, plunged 10% to a six-year low in \u200bearly trading, while the rupiah slid 0.6% to 18,000 per US dollar, its weakest level since August.<\/p>\n

Indonesian equities have struggled since January when MSCI froze Indonesia \u200bin its indexes and threatened a downgrade to \u201cfrontier\u201d status because of opacity in ownership and trading behaviour.<\/p>\n

On Friday, MSCI said reforms \u2060to address those problems have not made sufficient progress and that even a downgrade to frontier wouldn\u2019t reflect the severity of issues.<\/p>\n

Instead, it proposed to downgrade Indonesia to \u201cstandalone\u201d status, \u200bwhich would exclude Indonesian stocks from global indexes tracked by billions of dollars in passive investment, forcing funds that follow or are ranked against the indexes to sell.<\/p>\n

\u201cSignificant concerns \u200bremain around market dysfunction,\u201d MSCI said. \u201cAccordingly, MSCI considers Indonesia\u2019s continued classification as an emerging market no longer appropriate,\u201d it said.<\/p>\n

\u201cFeedback from market participants suggests that a reclassification to frontier markets would not properly recognise the depth of the market problems.\u201d<\/p>\n

The Indonesia Stock Exchange said it has taken concrete steps to enhance transparency and integrity in the country\u2019s capital market, and CEO Jeffrey Hendrik said in a statement \u200bhe would request further clarification on the basis for the announcement.<\/p>\n

Coming a month ahead of a scheduled review, MSCI\u2019s statement stunned investors and Jakarta officials, with the chief \u200bof Indonesia\u2019s financial regulator Friderica Widyasari Dewi saying she did not expect the announcement following a meeting this week.<\/p>\n

Finance minister Suahasil Nazara, who chairs the country\u2019s financial stability board, did not immediately \u200creply to a \u2060request for comment on the MSCI announcement.<\/p>\n

Angus Mackintosh, an ASEAN specialist at Aletheia Capital in Singapore, said the move does not reflect the health of the vast majority of listed companies or indeed the Indonesian economy, and \u201cgrouping Indonesia with Lebanon, Palestine, and Argentina does not make sense.\u201d<\/p>\n

\u201cThis is a wake-up call for Indonesia,\u201d he said.<\/p>\n

<\/a>Downgrade planned for mid-2027<\/strong><\/h3>\n

MSCI\u2019s move seemed heavy-handed given the steps Indonesia has taken to address issues<\/a> around market transparency and increase the free-float requirement for listed firms, Mackintosh said.<\/p>\n

The main problem, he said, is Indonesia\u2019s \u201cfailure \u200bto sanction those obviously involved in stock \u200bmanipulation\u201d.<\/p>\n

MSCI said it will run a consultation \u2060with market participants for a downgrade to \u201cstandalone\u201d status until April 2027 and then proceed with reclassification unless it finds clear evidence of improvement in market governance and function.<\/p>\n

Standalone markets are not included in MSCI\u2019s emerging or frontier index products, which are tracked by \u200bpassive funds and treated as performance benchmarks for other fund managers.<\/p>\n

MSCI says reclassification to standalone status may occur in the case \u200bof severe deterioration in \u2060market accessibility or size and liquidity, with the most recent example being Argentina.<\/p>\n

Gary Tan, portfolio manager at Allspring Global Investments, Singapore, called the move a surprise, noting the prospect of a standalone status could encourage index-linked investors to further de-risk.<\/p>\n

\u201cBut for Indonesia, in our view, the bigger concern is less the direct impact on equities and more the potential pressure on the \u2060currency from \u200bforeign outflows.\u201d<\/p>\n

Indonesia has faced a series of setbacks this year, with Moody\u2019s<\/a> and Fitch<\/a> cutting their sovereign rating outlooks \u200bto negative, citing reduced policymaking credibility.<\/p>\n

The benchmark Jakarta stock index has fallen more than 30% this year, making it the worst-performing equity market in the world, with net selling by foreign investors at $4.7 billion worth of \u200bshares.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Indonesia\u2019s stock market is no longer worthy of \u201cemerging market\u201d status, according to MSCI, and the index provider said it intends to \u200ccut it from a suite of products tracked by global investors. This major setback sent money fleeing. In a surprise move, MSCI said on Friday it would put Indonesia on a path to \u201cstandalone\u201d status, which was worse than previously flagged, and extended its review of the market by seven months to June 2027. Jakarta stocks, already the world\u2019s worst performers this year, plunged 10% to a six-year…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-2776","post","type-post","status-publish","format-standard","hentry","category-english"],"gutentor_comment":0,"_links":{"self":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts\/2776","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2776"}],"version-history":[{"count":0,"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts\/2776\/revisions"}],"wp:attachment":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2776"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2776"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2776"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}