Why Indonesia Risks Being Removed From MSCI’s Global Indexes
Indonesia has spent decades establishing itself as one of the world’s most important emerging markets. Now the country — Southeast Asia’s largest economy, with a gross domestic product of about $1.5 trillion — risks losing that standing, potentially jeopardizing billions of dollars in foreign investment.
Indonesia risks losing its status as an emerging market in MSCI's indexes, a move that could jeopardize billions of dollars in foreign investment. Bloomberg reports that Indonesia is Southeast Asia's largest economy, with a gross domestic product of approximately $1.5 trillion.
According to Straits Times Business, MSCI announced on Oct 16 that it intends to move Indonesia to "standalone" status, which it noted was a worse outcome than previously flagged. This decision follows a freeze on Indonesia's inclusion in indexes since January due to concerns regarding trading behavior and opacity in ownership. MSCI stated that reforms intended to address market dysfunction have not made sufficient progress and that even a downgrade to "frontier" status would not adequately reflect the severity of the issues.
The announcement caused Jakarta stocks to plunge 10% to a six-year low in early trading, while the rupiah slid 0.6% to 18,000 per US dollar. MSCI has extended its review of the market by seven months to June 2027. Being moved to standalone status would exclude Indonesian stocks from global indexes tracked by billions of dollars in passive investment, forcing certain funds to sell.
Brief written by urgent.news from Bloomberg, Straits Times Business — 2 reports on this story. Machine-written — may contain errors; check the original before relying on it.
