MSCI is considering excluding Indonesia from its global indices

MSCI points to problems in Indonesia's stock market and is considering excluding the country from its global indices. The organization's focus is on insufficient information about company owners, possible coordinated trading, and inadequate enforcement of existing rules. Because of this, it is difficult for investors to determine how many shares can actually be freely traded and how realistic their market prices are.

Indonesia has been part of MSCI's emerging markets indices since 1989. If the country is removed from this category, it will be given standalone market status. Lebanon and Zimbabwe currently belong to this group as well. In recent years, MSCI made similar decisions regarding Argentina and Russia.

MSCI's warning was followed by a sharp decline in Indonesia's stock market. The total value of local companies fell by approximately $65 billion, while Jakarta's main index dropped by 11.6%. This was the largest single-day decline since the 1998 Asian financial crisis.

MSCI will continue reviewing the issue until April 2027, with a final decision to be announced in June. Until then, Indonesia has time to address the problems related to company ownership and stock market oversight.

Source: Reuters