finance
MSCI to Decide on June 23 Whether Indonesia Keeps Emerging-Market Status
MSCI will rule June 23 on whether to reclassify Indonesia from emerging to frontier market status. Goldman Sachs estimates up to $13 billion could exit if the downgrade occurs. Foreign investors have already withdrawn $3.4 billion from the Jakarta exchange this year.
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MSCI will decide on June 23 whether to downgrade Indonesia from emerging market to frontier market status. Goldman Sachs calculated that such a move could trigger up to $13 billion in outflows from index funds. Fortune reported that MSCI first flagged concerns over ownership data and market opacity in late January 2026 and froze index adjustments for Indonesian securities at that time.
Last week the provider downgraded its assessment of Indonesia’s information flow to negative while keeping other criteria unchanged. The Jakarta Composite Index has fallen more than 28 percent in 2026, and foreign investors have withdrawn $3.4 billion from the exchange since January.
The rupiah has declined 7 percent this year, Asia’s worst performance, according to Bloomberg data cited by Fortune.
President Prabowo Subianto took office in 2024. Moody’s and Fitch lowered Indonesia’s sovereign outlook to negative in February and March. Inflation reached 4.76 percent by February, above the central bank’s 1.5-to-3.5 percent target.
Since the January warning, Indonesia raised the minimum free-float requirement to 15 percent from 7.5 percent and tightened shareholder disclosure rules to 1 percent from 5 percent. Achmad Sukarsono, associate director at Control Risks, told Fortune that automatic selling by index funds would follow a downgrade.
Josh Kurlantzick of the Council on Foreign Relations said the change would signal deeper problems to active managers. Other MSCI frontier markets include Bangladesh, Pakistan and Vietnam. Indonesia’s foreign reserves stand at their lowest level in two years.
