MSCI has opened a consultation on reclassifying Indonesia from an emerging market to a standalone market. The change could remove the country’s stocks from major global indexes.
MSCI cited persistent investor concerns about market transparency, opaque shareholding structures, suspected coordinated trading and a lack of meaningful enforcement. It said reforms had not made sufficient progress and that Indonesia’s emerging-market classification was no longer appropriate.
A reclassification could prompt passive funds tracking MSCI’s emerging-market indexes to sell their Indonesian holdings. The resulting outflows could reach billions of dollars and pressure the country’s currency and equity markets.
The consultation will run until April 30, 2027. MSCI expects to make a final decision by June 30, 2027.
The Jakarta Composite Index fell sharply after the news.