MSCI is considering a double reclassification of Indonesia from its current status as an emerging market, to a standalone market.
The index provider launched a consultation on the proposal in October, following the firm’s June 2026 Market Classification Review, which highlighted reports from market participants regarding concerns around the investability of Indonesia’s equity market.
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Specific concerns included persistent opacity in shareholding structures, as well as suspected coordinated trading behaviour and a lack of meaningful reform enforcement.
In particular, the double reclassification comes after market feedback indicated that a step down to frontier markets would not fully recognise the depth of the market’s issues.
Alongside the consultation, MSCI has confirmed a continuous freeze on certain index related changes for Indonesian securities resulting from index reviews or corporate events until further notice.
Moreover, the index provider will also delete securities identified by Indonesian authorities under the High Shareholding Concentration (HSC) reporting framework, as well as leverage the 1% shareholder disclosure data to adjust free float estimates.
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Indonesian authorities have recently made efforts to tackle these issues related to the equity market, with reforms spanning enhanced disclosure of shareholders with ownership above 1%, more granular investor classification disclosure, HSC reporting and a roadmap towards a minimum free float requirement of 15%.
Despite these reforms, market participants have highlighted that consistent implementation and evidence of sustained material impact is still required to enhance the country’s investability.
MSCI has opened the doors for market feedback on the reclassification proposal until 30 April 2027.
The index provider is set to make a decision on Indonesia’s status either on or before 30 June 2027.