MSCI consults on moving Indonesia out of emerging-market category
Market participants have until 30 April 2027 to respond, with a final decision due on or before 30 June 2027.
MSCI has opened a consultation on a proposal to reclassify Indonesia from an Emerging Market to a Standalone Market, citing investor concerns about ownership transparency and suspected coordinated trading. It expects to proceed unless the consultation provides clear evidence of material improvements in market governance and functioning.
Responses are due by 30 April 2027, and MSCI plans to announce its decision on or before 30 June 2027. It may provide interim updates on feedback. MSCI said market participants considered a move to Frontier Market status insufficient to reflect the extent of the problems.
In its June 2026 classification review, MSCI reported significant concerns among market participants about investors' ability to access Indonesian equities transparently and efficiently. It said adequate, consistent progress had not been demonstrated across the market, with concerns persisting over suspected coordinated trading and a lack of evidence of meaningful enforcement.
Indonesian capital-market regulators have announced reforms including disclosure of shareholders owning more than 1%, more detailed investor classifications, High Shareholding Concentration (HSC) reporting and a roadmap towards a minimum free float of 15%. According to MSCI, institutional investors want consistent implementation and evidence that the measures deliver sustained, material results.
During the consultation, MSCI will maintain a freeze on certain Indonesian index changes until further notice. It will not increase the Foreign Inclusion Factor (FIF) or Number of Shares (NOS), add stocks to the MSCI Indonesia Investable Market Index (IMI), or move stocks into higher market-capitalisation segments.
FIF determines the share proportion available to foreign investors for index calculations, while NOS is the share count used. MSCI will continue removing stocks identified by Indonesian authorities under the HSC framework and using disclosures of holdings above 1% to adjust free-float estimates.
