MSCI extends Indonesia review to November, flags possible downgrade

MSCI extended its review of Indonesia’s classification as an “emerging” markets economy through November and signaled potential further steps, including a downgrade to “frontier.” On Tuesday, the index provider said it will consider options if progress is insufficient by its November review, after raising concerns voiced by international institutional investors. MSCI cited persistent opacity in Indonesia’s shareholding structures and suspected coordinated trading behavior, linking these issues to the Information Flow and Market Infrastructure pillars of its Market Accessibility framework. The company acknowledged transparency reforms announced by Indonesia’s regulator Otoritas Jasa Keuangan (OJK), the exchange PT Bursa Efek Indonesia (IDX), and the depository PT Kustodian Sentral Efek Indonesia (KSEI). Indonesia’s stocks have struggled since January, when MSCI froze them in its indexes and warned of a potential downgrade.