MSCI Proposes Downgrading Indonesian Capital Market to "Standalone Market" Category

Jakarta: Morgan Stanley Capital International (MSCI) has begun consulting with market participants on a proposed reclassification of the Indonesian capital market, shifting it from an "Emerging Market" to a "Standalone Market."

According to an MSCI announcement received in Jakarta -,as reported by Antara on Friday, October 16, 2026,- a final decision on this proposed reclassification will be announced no later than June 30, 2027. During the consultation period, MSCI may provide interim updates on feedback received from market participants.

MSCI noted that market participants' concerns about the viability of investing in the Indonesian capital market have grown significantly. Key issues under discussion include unclear share ownership structures and allegations of coordinated trading practices.

MSCI acknowledged that Indonesian capital market authorities have announced several reform measures. These policies include enhanced disclosure requirements for shareholders with stakes exceeding one percent, more detailed classification of investor types, and reporting on "High Shareholding Concentration" (HSC).

Furthermore, Indonesian capital market authorities have developed a roadmap to implement a 15 percent minimum public float requirement. Nevertheless, MSCI emphasizes that these reforms must be implemented consistently. The global index provider also underscored the need for evidence demonstrating the sustained, material impact of the various improvement measures already announced.

MSCI said market participants continue to report insufficient and inconsistent progress across the Indonesian stock market. Concerns persist about alleged coordinated trading practices, along with an apparent lack of meaningful enforcement of market regulations.

Indonesia Proposed for Reclassification to "Standalone Market"

Previously, in June 2026, MSCI indicated that it would consider a reclassification consultation if sufficient progress was not observed by the time of the November 2026 Index Review.

Based on the feedback received, MSCI now believes Indonesia’s classification as an "Emerging Market" warrants review. Consequently, the firm has initiated a consultation process to propose changing Indonesia’s status to a "Standalone Market."

MSCI also noted that reclassifying Indonesia as a "Frontier Market" would not adequately reflect the severity of the issues market participants raised. Through this consultation, MSCI seeks evidence of material improvements in market governance that could support reconsidering the reclassification proposal.

MSCI Maintains Freeze on Index Changes

Throughout the consultation process, MSCI will maintain a freeze on certain index changes concerning Indonesian stocks—whether arising from index reviews or corporate actions—until further notice.

This policy entails the suspension of the following:

• Increases to the Foreign Inclusion Factor (FIF).
• Adjustments to the Number of Shares (NOS) that would increase a stock’s weight within the index.
• Additions of stocks to the MSCI Indonesia Investable Market Index (IMI).
• Transfers of stocks to index segments with larger market capitalizations.

Nevertheless, MSCI will continue to remove stocks identified by Indonesian authorities under the "HSC" (High-Risk/Restricted Stock) framework.

Additionally, MSCI will utilize shareholder disclosure data—specifically for holdings exceeding one percent—to refine estimates of the "free float" (shares available to the public) for Indonesian stocks.

MSCI has also opened a window for market participants to provide input on the proposed reclassification until April 30, 2027. Once the consultation process concludes, MSCI will announce its final decision by June 30, 2027.

During this period, the organization may also provide updates on the feedback it receives. This decision will determine the outcome of MSCI’s evaluation of the Indonesian capital market's classification, based on the ongoing consultation process.