MSCI to consult on proposal to reclassify the MSCI Indonesia Indexes to Standalone Market status
Existing freeze on Indonesian securities in MSCI Indexes to remain in place until further notice

MSCI announced the launch of a consultation on a proposal to reclassify the MSCI Indonesia Indexes from Emerging Market to Standalone Market status. MSCI will announce its final decision by the end of June 2027 and may provide an interim update on market participant feedback during the consultation period.

As part of the June 2026 Market Classification Review, MSCI reported that market participants had raised significant concerns regarding the investability of the Indonesian equity market, including persistent opacity in shareholding structures and suspected coordinated trading behavior. While the Indonesian authorities have announced reforms, including enhanced disclosure of shareholders with ownership above 1%, more granular investor classification disclosure, High Shareholding Concentration (HSC) reporting, and a roadmap towards a minimum free float requirement of 15%, institutional investors have emphasized the need for consistent implementation and evidence of sustained material impact from these announcements. MSCI indicated in June that if sufficient progress was not evident by the November 2026 Index Review, MSCI would consider launching a consultation on reclassifying the Indonesian market.

Market participants have indicated to MSCI that, to date, sufficient progress has not been observed consistently across the Indonesian equity market. Despite the announced reforms, significant concerns remain around market dysfunction, including continued suspected coordinated trading behavior and lack of evidence of meaningful enforcement.

Accordingly, MSCI considers Indonesia’s continued classification as an Emerging Market no longer appropriate and is launching a consultation on a proposal to reclassify Indonesia as a Standalone Market. Feedback from market participants suggests that a reclassification to Frontier Markets would not properly recognize the depth of the market problems. MSCI expects to proceed with the proposed reclassification unless the consultation identifies clear evidence of material improvements in market governance and functioning to warrant reconsideration.

MSCI will continue applying the existing freeze on certain index related changes for Indonesian securities resulting from Index Reviews or corporate events until further notice. Under this treatment, MSCI will not implement increases to Foreign Inclusion Factors (FIF) or Number of Shares (NOS), additions to the MSCI Indonesia Investable Market Index (IMI) or upward migrations across size-segment indexes.

MSCI will continue to delete securities identified by the Indonesian authorities under the HSC framework and to use the 1% shareholder disclosure data to adjust free float estimates.

MSCI welcomes feedback from market participants on this reclassification proposal for the MSCI Indonesia Indexes until April 30, 2027 and will announce its decision on or before June 30, 2027. Further details may be found in the consultation document available at https://www.msci.com/index-consultations. To participate in the consultation, please provide your feedback by e-mail to clientservice@msci.com.

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