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MSCI Delays Indonesia Downgrade Amid $13 B Outflow Threat

6/25/2026

Summary

MSCI Delays Downgrade

MSCI will keep Indonesia in emerging-market index and delay downgrade until November 2026.
The Jakarta Stock Exchange doubled free-float to 15 % and will demutualise, letting insurers and pension funds raise stakes.
Goldman Sachs warns a downgrade could trigger up to $13 billion of outflows after $370 billion of losses since January.
Investors sold $3.9 billion of shares and the rupiah slipped to 17,953 per dollar after the Jakarta Composite Index fell 30 % this year.

Summary

OJK Gains Recognition

MSCI’s decision recognized Financial Services Authority (OJK) reforms and gave momentum to accelerate the capital-market reform agenda.
FTSE Russell affirmed Indonesia as a Secondary Emerging Market on April 7, alongside China and India.
By May 31 OJK had levied Rp 138.9 billion ($7.8 million) in fines on 329 investors for administrative and capital-market violations.
Hasan Fawzi attended a parliamentary confirmation hearing on March 11, 2026 for his OJK Executive Head nomination.

Summary

Government Stimulus

The Jakarta Composite Index opened higher on Wednesday, gaining 27 points (0.44%) to 6,128 with 1 billion shares traded and Rp 709 billion turnover.
Phintraco Sekuritas warned that negative external sentiment and the MSCI announcement could push the JCI toward the 6,000 level, heightening market pressure.
The government announced a Rp 26.34 trillion stimulus for 2026, allocating Rp 2.04 trillion for tax incentives and transport, Rp 6.26 trillion for a national apprenticeship program, and Rp 18.04 trillion for food assistance.

Summary

MSCI Updates Markets

MSCI kept South Korea in the emerging market category because offshore won convertibility remains limited and investor-identification restrictions persist.
MSCI announced on June 23, 2026 that Bulgaria will shift from Standalone to Frontier Market status after meeting size and liquidity thresholds following its euro adoption on January 1, 2026.
MSCI confirmed Greece’s upgrade to Developed Market status on March 31, 2026, after a consultation that began on January 26, 2026.

History

Historical Context

When MSCI added mainland Chinese A-shares to its Emerging Markets Index in 2018, it assigned them a 5 % weighting. MSCI’s classification criteria—income level, market size and accessibility—determine emerging-market status, guiding institutional investors across dozens of economies and showing how index revisions continue to shape global capital flows affecting fund allocations worldwide.

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MSCI Delays Downgrade

MSCI will keep Indonesia in emerging-market index and delay downgrade until November 2026.
The Jakarta Stock Exchange doubled free-float to 15 % and will demutualise, letting insurers and pension funds raise stakes.
Goldman Sachs warns a downgrade could trigger up to $13 billion of outflows after $370 billion of losses since January.
Investors sold $3.9 billion of shares and the rupiah slipped to 17,953 per dollar after the Jakarta Composite Index fell 30 % this year.

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