On Wednesday, Jakarta Stock Exchange Composite (JKSE) edged slightly higher in early trading session, following the announcement by the MSCI Index to extend its review on Indonesia’s status within the Emerging Markets group to as early as November. The market could be downgraded to Frontier Market if transparency and structural issues remain unresolved.
According to a report by Reuters, MSCI is closely monitoring Indonesia’s progress in addressing long-standing concerns regarding its market structure. Foreign institutional investors have expressed deep investability concerns regarding the lack of transparency in the shareholding structures of listed companies and suspicious coordinated trading patterns.
These issues directly impact Indonesia’s standing under MSCI’s Market Accessibility Framework, specifically in the categories of information flow and market infrastructure. Earlier this year, in January 2026, MSCI took the preliminary step of suspending several Indonesian stocks from its indices, citing insufficient disclosure of free-float proportions and the questionable reliability of trading data.
Indonesian regulatory bodies—including the Financial Services Authority, the Indonesia Stock Exchange, and the Indonesian Central Securities Depository—have recently introduced measures aimed at enhancing market transparency. While MSCI has acknowledged these efforts, it emphasized that more significant progress is required by the November review cycle to avoid a reclassification.
Outside of the Indonesia’s review extension, MSCI 2026 Market Classification Review also include the following revision:
1. Bulgaria: Upgraded to Frontier Market status.
2. Turkey: Similar to the Indonesia market, MSCI has expressed concerns about shareholder transparency and coordinated trading behavior, which may lead to a downgrade if there is no clear progress by November 2026.
3. South Korea: Despite market improvement measures, progress remains insufficient for an upgrade to Developed Market status. Key factors include won transaction processes, difficulties in using Omnibus accounts, regulatory burdens following the short-selling ban, and advance cash deposit requirements.
4. Bangladesh: The removal of floor price measures, which distorted price mechanisms, is viewed as a positive development. However, if such measures are reinstated, MSCI may immediately consider downgrading Bangladesh from Frontier Market back to Standalone Market.
5. Greece: Upgraded to Developed Market (from Emerging Market), effective November 2027.
Krungsri Securities (KSS) stated that the MSCI’s decision offers a slight positive signal for the Thai stock market. Indonesia’s continued placement under observation—effectively putting its emerging markets status in a “freeze” until at least November 2026—maintains Thailand as an attractive option for international investors seeking exposure to Asian emerging markets. As long as Indonesia’s position remains uncertain, the Thai bourse could benefit from a potential reallocation of investor interest and capital inflows.
According to Krungsri Securities, while there is no immediate threat to Indonesia’s current emerging market classification, the situation warrants close monitoring. Failure to address MSCI’s concerns could ultimately result in a downgrade, which would have important implications for capital flows and regional market dynamics across emerging markets in Asia.
However, despite early gains, as of 10:23 a.m. (Bangkok Time), the Indonesian bourse pared gain and extended loss by 1.04%.
