MSCI has warned of possible downgrade over opaque ownership data and low free float
An electronic display shows stock movements at the Indonesia Stock Exchange in Jakarta. (Photo: Reuters)
SINGAPORE - The global index provider MSCI is poised to decide on Tuesday whether Indonesia will retain its emerging market status or edge towards a downgrade to “frontier” status, a move that could accelerate outflows from the world’s worst-performing stock market.The announcement matters because it will steer billions in passive funds that track the influential MSCI indices and may either lift or darken a market that has turned from darling to deadweight.
Analysts expect Jakarta’s recent reforms, including moves to raise free-float levels, to be enough to avert an abrupt demotion. They also took comfort from an MSCI update last week, which contained no broad criticisms.
Still, Tuesday’s decision, due after US markets close, may deliver neither clarity nor relief. Investors will be watching just as closely for any sign that MSCI will lift a freeze on adding Indonesian stocks to its indices.
