Indonesia stocks rise after MSCI extends review to November

Indonesian stocks rose 0.34% on Wednesday after MSCI pushed its review of the country's emerging markets status to November, citing progress in Jakarta's reform measures.

Indonesian ​stocks rose slightly on Wednesday after ‌index provider ​MSCI pushed its review on the country's emerging markets status to November to assess the slate of reform measures rolled ‌out by Jakarta.

Indonesia's benchmark index gained 0.34% in early trading on Wednesday. The index is down 29% so far this year, making it the world's worst-performing major stock market. Indonesian assets ‌have been hammered since January, when MSCI froze the country's stocks in its ‌indexes and raised the prospect of a downgrade to frontier status, leading to a flurry of reforms, including moves to raise free-float levels.

The index provider late on Tuesday called those measures a "step in the ⁠right direction", ​but warned it ⁠would consider options such as a consultation on a downgrade to frontier status if sufficient progress was not ⁠evident by its November review. Gary Tan, portfolio manager at Allspring Global Investments, said the outcome was ​in line with market expectations, with the tone of MSCI’s statement more cautionary than ⁠outright negative. "What stood out is the clear shift toward implementation and measurable outcomes, signalling that announced reforms ⁠alone ​are not sufficient," Tan said.

"The extension of the review to November keeps pressure on regulators and effectively kicks the decision down the road." Indonesia's financial regulator said on ⁠Wednesday the MSCI announcement would serve as momentum to strengthen and accelerate the capital market reform ⁠agendas initiated since January.

MSCI ⁠in April had extended its review of Indonesian markets to June, and in May cut several companies - most of which were tied ‌to tycoons - from ‌its indexes.

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