MSCI on Thursday (Jun 18) downgraded Indonesia’s information flow criterion to negative, as it reiterated concerns around transparency in shareholding structures and signs of coordinated trading in the country’s stock market, in its 2026 Global Market Accessibility Review.

Indonesia’s capital markets have plunged since MSCI, a provider of equity, fixed income, real estate indices, in January flagged transparency concerns and warned of a downgrade to frontier status from emerging, a move that could trigger outflows worth as much as US$13 billion.

The benchmark Jakarta stocks index is down more than 27 per cent this year, making it the worst-performing major market in the world, with foreign investors having sold about US$3.76 billion worth of Indonesian stocks so far in 2026.

The index provider said the downgrade reflected opacity in ownership data and market activity, which undermines proper price formation and constrains global investors’ ability to assess the true free float of listed companies.

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MSCI also pointed to foreign exchange market limitations as another barrier for investors.

“There is no efficient offshore currency market and there are constraints on the onshore currency market in Indonesia,” MSCI said, noting that the level of foreign exchange liberalisation remains limited.

The January warning and subsequent market rout had spurred a slate of reform measures, including doubling the minimum free float for listed companies to 15 per cent as the brass of the exchange and regulatory body resigned in a single afternoon.

MSCI in April extended its review on Indonesian markets and in May removed six companies, most of which were tied to tycoons, from its indexes, leading to another sharp drop in stocks.

Indonesia’s rupiah weakened and equities were choppy on Friday. The benchmark Jakarta Composite Index drifted in a tight range around its prior close where it settled after the central bank hiked interest rate for a third time in a month.

On South Korea, MSCI said the country has pressed ahead with reform measures introduced in recent years, but underlying market accessibility issues remain unresolved.