By Amanda Lee
Index provider MSCI is extending its review of Indonesian stocks to assess the country's recent transparency reforms, after its January downgrade warning sparked a market rout and foreign investor outflows.
MSCI said late Monday that it is assessing the scope, consistency and effectiveness of new data sources and measures rolled out by Indonesian authorities, adding that it will provide further updates in a June review.
The index provider had previously flagged investability issues and warned that the Southeast Asian country could be downgraded to frontier-market status, a rung below its current emerging-market status. It also froze some index-related changes for Indonesian securities.
Indonesian authorities have sought to address concerns raised by MSCI and announced a series of market reforms, including doubling the minimum free-float requirement to 15% of total shares and enhancing disclosure of shareholders with more than 1% ownership.
Indonesia's stock market has yet to recover losses triggered by the MSCI warning and remains Asia's worst performer this year. The benchmark Jakarta Composite Index fell more than 1% early Tuesday, bringing its year-to-date decline to about 13%.
Due to the extension, MSCI will continue to freeze increases to foreign inclusion factors and the number of shares for Indonesian securities, it said. It will also remove securities flagged under Indonesia's new high shareholding concentration framework and could use the 1% shareholder disclosure data to adjust free-float estimates.
MSCI said it will continue engaging with market participants and Indonesian authorities.
Earlier in April, fellow index provider FTSE Russell maintained Indonesia's classification as a secondary emerging market, adding that it wasn't considering placing the country on its watchlist.
Write to Amanda Lee at amanda.lee@wsj.com
(END) Dow Jones Newswires
04-21-26 0127ET
