Official Consultation Opens 15 October 2026

JAKARTA — Global index provider Morgan Stanley Capital International (MSCI) has officially announced the opening of a consultation process regarding a proposal to downgrade (reclassify) the status of the MSCI Indonesia Index. The announcement was released from New York on October 15, 2026, local time.

MSCI proposed that the Indonesian stock market be downgraded from Emerging Market to Standalone Market. In its announcement, MSCI emphasized that the final decision on this proposal will be announced no later than the end of June 2027.

"MSCI considers that the continuation of Indonesia's classification as an Emerging Market is no longer appropriate and is launching a consultation on the proposal to reclassify Indonesia as a Standalone Market," MSCI wrote in its official announcement.

Reason: Transparency and Alleged Coordinated Trading

MSCI revealed that the consultation was carried out after market participants raised concerns about the Indonesian stock market, including a lack of transparency in shareholding structures and alleged coordinated trading behavior.

"Although the reform has been announced, significant concerns remain regarding market dysfunction, including the alleged continued coordinated trading behavior and the absence of evidence of meaningful rule enforcement," MSCI said in an official statement.

Interestingly, MSCI stated that based on input from market participants, the Frontier Market category was deemed insufficient to describe the problems found in Indonesia's stock market. Therefore, the proposal under discussion is not merely a downgrade to frontier, but instead directly to Standalone Market — a category that is also home to Argentina, Panama, Nigeria, and even Ukraine.

Indonesian Index Frozen During Consultation

Along with the launch of this consultation, MSCI confirmed that it will maintain its freeze policy on index changes for Indonesian securities until further notice.

Under this treatment, MSCI will not implement an increase in the Foreign Inclusion Factor (FIF) or the Number of Shares (NOS), will not add new constituents to the MSCI Indonesia Investable Market Index (IMI), and will postpone the migration for the share class upgrade across all index size segments.

In addition, MSCI stated it will continue to remove securities identified by Indonesian authorities under the High Shareholding Concentration (HSC) framework and utilize shareholder disclosure data above 1 percent to adjust its free float estimates.

The Authorities' Response and Its Impact

Bursa Efek Indonesia (BEI) has spoken out in response to MSCI's announcement, stressing that the announcement is not a final decision. Indonesia's capital market authorities — OJK, BEI, and KSEI — had previously announced a series of reform measures, covering the disclosure of shareholders with ownership above 1 percent, HSC reporting, and a road map to raise the minimum free float threshold to 15 percent.

However, for MSCI, a policy announcement alone is not enough. The authorities need to demonstrate that the reforms are truly implemented consistently and deliver a real impact on transparency and market quality.

For context, on Friday (16/10/2026) the Composite Stock Price Index (IHSG) plunged 11.57 percent to the 5,185.11 level, triggering a temporary trading halt — a shock set off by market concerns over the fate of Indonesia's classification at MSCI.