Business · Markets · 18 hrs ago
MSCI Review Puts Indonesia’s Stock Market Under Pressure
MSCI is due to announce its November 2026 index changes on November 12, Jakarta time.
The concern is that MSCI could later move Indonesia from emerging-market status to a standalone market, potentially in the second quarter of 2027.
An economist estimates the downgrade could trigger $2 billion to $6 billion in stock outflows, from both funds that track MSCI and other investors.
Foreign investors may wait rather than sell immediately, and some may move money into other, lower-risk investments in Indonesia.
The direct effect on the rupiah is expected to be limited; the economist estimates that each $100 million leaving stocks would weaken the currency by 11 to 12 rupiah.
The Indonesia Stock Exchange is focusing on transparency, liquidity and market oversight ahead of the index changes, including improving disclosures about major shareholders and their affiliates.
Trading activity and market value fell in the week ending November 6, while foreign investors recorded net selling of 98.08 trillion rupiah over 2026 so far.
MSCI is scheduled to announce its November 2026 index rebalancing on 11 November in Central European Time, or 12 November at 05:00 WIB.
Bank Danamon chief economist Irman Faiz estimates that a downgrade of Indonesia from emerging-market to standalone-market status in the second quarter of 2027 could lead to US$2 billion to US$6 billion in stock-market outflows.
Faiz said foreign investors may wait rather than immediately sell, and that some proceeds from stock sales could be redirected into lower-risk Indonesian assets.
He said stock-market outflows would have a limited direct effect on the rupiah compared with their effect on the stock market.
The Indonesia Stock Exchange said it is prioritising improvements to transparency, liquidity and market supervision ahead of the MSCI rebalancing.
- Who
- MSCI, foreign investors, Bank Danamon chief economist Irman Faiz and the Indonesia Stock Exchange.
- What
- MSCI is due to announce its November 2026 index rebalancing. A possible future downgrade of Indonesia’s market classification could prompt stock-market outflows.
- When
- The announcement is scheduled for 11 November 2026 in Central European Time, or 12 November at 05:00 WIB. The possible downgrade is discussed for the second quarter of 2027.
- Where
- Indonesia’s stock market.
- Why
- Investors are concerned about a possible downgrade of Indonesia from emerging-market to standalone-market status.
This story does not have two clearly opposing sides.
Indonesia Stock Exchange market capitalisation fell 1.34% to Rp8,744 trillion from Rp8,862 trillion the previous week.
Foreign investors recorded net purchases of Rp328.20 billion.
MSCI is scheduled to announce its November 2026 index rebalancing.
A possible downgrade of Indonesia to standalone-market status could lead to stock-market outflows, according to Faiz.
- MSCI announcement
- 11 November 2026 in Central European Time; 12 November at 05:00 WIB
- Estimated outflows
- US$2 billion to US$6 billion
- Possible downgrade timing
- Second quarter of 2027
- Market capitalisation
- Rp8,744 trillion on 2–6 November 2026
- Cumulative foreign net sales
- Rp98.08 trillion in 2026
What people are saying
We see potential outflows from the stock market of around US$2 billion to US$6 billion, consisting of both active and passive funds.
They will only leave if we are downgraded, so the effect would be more lagging, toward the second quarter of 2027.
They will not all leave immediately, but many are still staying.
In the stock market, investors can first rotate their assets before leaving, so the sensitivity of our rupiah is lower.