Key facts
- MSCI is considering downgrading Indonesia to standalone market status.
- Concerns include opaque ownership, concentrated shareholdings, and suspected coordinated trading.
- Indonesia announced reforms including enhanced shareholder disclosure and a minimum free-float requirement.
- MSCI stated market participants have not seen consistent evidence of material improvement.
- The consultation period for the proposed downgrade ends April 30, 2027.
MSCI announced on Thursday that it is considering downgrading the MSCI Indonesia Index from emerging market to standalone market status. The index provider launched a consultation on the proposed downgrade after issuing a warning in June that Indonesia could face reclassification if concerns about market accessibility persisted. Investors have raised concerns about opaque ownership structures, concentrated shareholdings, and suspected coordinated trading, which MSCI said undermined the market's investability. Indonesian authorities have since announced reforms, including enhanced shareholder disclosure requirements and a roadmap for a minimum free-float requirement of 15 percent. However, MSCI stated that market participants had yet to see consistent evidence that the measures had materially improved market functioning. The consultation will run until April 30, 2027, with a final decision due by June 30.