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🇮🇩 Indonesia /Economy & Trade

MSCI Downgrades Indonesia's Information Flow Assessment to Negative

From Tempo · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

News Official statement Context piece
  • MSCI has downgraded Indonesia's information flow criteria to negative in its Global Market Accessibility Review 2026.
  • The downgrade reflects ongoing concerns about transparency in free float and proper price formation, impacting emerging market assessments.
  • This development could affect Indonesia's classification as an Emerging Market ahead of MSCI's upcoming Annual Market Classification Review.

Morgan Stanley Capital International (MSCI) has lowered its assessment of Indonesia's information flow criteria to a negative rating. This adjustment, part of the Global Market Accessibility Review 2026, signals persistent concerns regarding the transparency of free float and the accuracy of price formation within the Indonesian market.

Information flow is one of the assessment aspects in the efficiency of the operational framework criteria.

— MSCIExplaining the relevance of information flow in their market accessibility review.

MSCI evaluates five key criteria: openness to foreign investors, ease of capital movement, operational framework efficiency, availability of investment instruments, and institutional framework stability. The information flow assessment falls under the operational framework efficiency category. Indonesia's rating has shifted from a "+" (no issues but room for improvement) to a "-" (needs improvement).

Indonesia and Turkey are the only emerging markets to experience a downgrade in this specific criterion. MSCI's report highlights that the reduced rating for Indonesia stems from a lack of transparency in share ownership structures and evidence of coordinated trading activities that undermine proper price discovery. These issues, MSCI notes, can disrupt price formation and exacerbate market volatility.

The Information flow criteria has been downgraded for both markets, reflecting ongoing concerns surrounding free float transparency and proper price formation.

— MSCIDetailing the reason for the downgrade in their report.

Further compounding these concerns, MSCI pointed out that detailed market information is not always available in English, potentially creating a barrier for international investors. Despite these challenges, Indonesia currently remains classified as an Emerging Market. However, the upcoming Annual Market Classification Review, scheduled for June 23-24, will determine its final status.

Concerns about investability remain due to limited transparency in share ownership structures and coordinated trading behavior that undermines proper price formation.

— MSCIElaborating on the specific issues affecting Indonesia's market.
DistantNews Editorial

Originally published by Tempo in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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