MSCI extends Indonesia review to November, flags possible downgrade

MSCI has extended its review of Indonesia's emerging market status, citing concerns over opacity in shareholding structures and suspected coordinated trading behaviour.

​Global index provider ‌MSCI said on ​Tuesday it extended its review of Indonesia's status as ‌an "emerging" markets economy and may consider options including a reclassification to "frontier" status, if progress is insufficient by its ‌November review.

The global index provider flagged concerns from international ‌institutional investors over persistent opacity in shareholding structures and suspected coordinated trading behaviour in Indonesia. It said these issues relate directly ⁠to ​the ⁠Information Flow and Market Infrastructure pillars of its Market Accessibility framework, with ⁠market participants raising "profound investability concern" stemming from them.

MSCI acknowledged ​recent transparency reforms announced by regulator Otoritas Jasa Keuangan (OJK), ⁠stock exchange PT Bursa Efek Indonesia (IDX) and depository PT Kustodian ⁠Sentral ​Efek Indonesia (KSEI). Indonesian assets have been struggling since January, when MSCI froze the country's stocks in ⁠its indexes and threatened a potential downgrade to "frontier" status, pointing ⁠to ⁠opaque ownership, weak free float visibility and unreliable trading data.