Jakarta: Global index provider, MSCI, maintained Indonesia's status as an Emerging Market in its 2026 Global Market Accessibility Review. Indonesia's Information Flow criterion, however, has been downgraded from positive to negative.
MSCI attributed the downgrade to limited transparency in share ownership structures, alongside signs of coordinated trading activity, which disrupted fair market price formation.
These conditions were deemed to have hampered global institutional investors' ability to assess free float levels, and reduced the reliability of stock prices as a benchmark for investment portfolio construction and index replication.
“As a result of these conditions, Indonesia’s Information Flow criterion has been lowered (to negative),” wrote MSCI in its report on Friday, June 19, 2026.
MSCI Highlights According to MSCI, the lack of transparency in share ownership data and trading activity has hindered the price formation process. This has made it difficult for global investors to accurately gauge the portion of shares available for public trading in listed companies.
In its assessment, MSCI downgraded the Information Flow criterion from “+” to “-”. The downgrade reflects ongoing concerns regarding free float transparency and the effectiveness of price formation mechanisms in Indonesia.
“The downgrade is based on persistent investability issues stemming from limited transparency in share ownership structures as well as the detection of coordinated trading behavior that has disrupted fair price formation,” wrote MSCI.
MSCI further highlighted the limited availability of stock market information in English. Under the Equal Rights to Foreign Investors criterion, the availability of company information in English remains uneven, making it arduous for foreign investors to obtain sufficient information.
Under the Foreign Exchange Market Liberalization Level criterion, Indonesia was considered to lack an efficient offshore currency market. MSCI noted that several restrictions remain in place in its onshore foreign exchange market, including requirements to link foreign exchange transactions to securities transactions.
Speaking on the market infrastructure, MSCI wrote that the overdraft facilities during the clearing and settlement process are not yet available for foreign investors. In-kind transfers, under the Transferability criterion, are also subject to similar restrictions.
Although stock lending is permitted, it remains limited to certain securities, with a maximum contract term of 90 days. Short selling is also permitted, with several restrictions.
MSCI added that coordinated trading behavior has been observed outside of Indonesia – namely in Turkey – particularly amongst small-cap companies. Such practices are considered to disrupt market efficiency and increase trading volatility.
(Jonathan Sianto)
MSCI Retains Indonesia’s Emerging Market Status
