FTSE keeps Indonesia’s market status amid ongoing reforms
The country has carried out a series of initiatives to address MSCI’s concerns
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[SINGAPORE] FTSE Russell will “closely monitor” Indonesia’s capital market reforms after the postponement of a March index review of the nation’s equities.
The index compiler said that it is not considering Indonesia for inclusion on the watch list, and the country’s Secondary Emerging market status remains unchanged, according to its statement.
“FTSE Russell will confirm the treatment of Indonesian securities ahead of the June 2026 index review, taking into account reform progress and stakeholder input,” it said.
The decision puts further pressure on Indonesian authorities to improve transparency, after MSCI’s warning on the investability of the nation’s stock market in January triggered one of the worst sell-offs in decades. A gauge of Indonesian shares is down more than 17 per cent since the start of the year, making it the world’s worst-performing benchmark.
FTSE in February excluded Indonesian stocks from its periodic index review for inclusion or exclusion of stocks due to the risk of adverse turnover and uncertainty in determining public float amid the ongoing reforms by regulators.
“The fact that FTSE will confirm its treatment ahead of the June review keeps some overhang in place, but this process also reflects that reforms being pushed by regulators are being acknowledged and assessed rather than dismissed,” said Mohit Mirpuri, a partner at SGMC Capital.
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“This should provide some near-term relief for investors and when coupled with the broader risk-on tone following the ceasefire announcement last night, it could help stabilise sentiment towards Indonesian assets in the near term,” he added.
The Jakarta Composite Index rose as much as 3.2 per cent on Wednesday (Apr 8), the most in nearly a year, as the US-Iran ceasefire boosted sentiment towards risk assets.
Indonesia has carried out a series of initiatives to address MSCI’s concerns, including a stock exchange ruling last week requiring listed companies to raise their public float to at least 15 per cent within three years. The bourse also disclosed the names of companies with shareholding concentrations of more than 95 per cent, including firms owned by the country’s richest tycoons.
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“Indonesia’s retention of EM (emerging market) status in FTSE is a positive move,” said Nirgunan Tiruchelvam, an analyst at Aletheia Capital, adding that there is a large pool of value stocks in the market now. “The depth of opportunity is stronger in Indonesia” than in Vietnam, whose upgrade to EM status was confirmed by the index compiler on Tuesday. BLOOMBERG
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