MSCI downgrades Indonesia's information flow criterion on transparency concerns

MSCI downgraded Indonesia's information flow criterion to negative due to transparency concerns and signs of coordinated trading, potentially triggering $13 billion in outflows from the country's capital markets.

MSCI on Thursday downgraded Indonesia's information flow criterion ‌to negative, as it reiterated concerns around transparency in shareholding structures and signs of coordinated trading in the country's stock market, in its 2026 Global Market Accessibility Review. Indonesia's capital markets have plunged since MSCI in January flagged ‌transparency concerns and warned of a downgrade to frontier status from emerging, a move that could ‌trigger outflows worth as much as $13 billion.

The benchmark Jakarta stocks index is down more than 27% this year, making it the worst-performing major market in the world, with foreign investors having sold about $3.76 billion worth of Indonesian stocks so far in 2026. The ⁠index ​provider said the downgrade ⁠reflected opacity in ownership data and market activity, which undermines proper price formation and constrains global investors' ability to assess the true ⁠free float of listed companies.

MSCI also pointed to foreign exchange market limitations as another barrier for investors. "There is no ​efficient offshore currency market and there are constraints on the onshore currency market in Indonesia," MSCI ⁠said, noting that the level of foreign exchange liberalisation remains limited.

The January warning and subsequentmarket rout had spurred a slate of reform ⁠measures, ​including doubling the minimum free float for listed companies to 15% as the brass of the exchange and regulatory body resigned in a single afternoon. MSCI in April extended its review on Indonesian ⁠markets and in May removed six companies, most of which were tied to tycoons, from its indexes, leading ⁠to another sharp ⁠drop in stocks.

On South Korea, MSCI said the country has pressed ahead with reform measures introduced in recent years, but underlying market accessibility issues remain unresolved.