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View all search resultsIDX must walk the walk
Indonesia’s temporary reprieve from an MSCI downgrade bought the market some time, but empty promises won't stop a devastating sell-off unless regulators finally stop talking and start executing real transparency reforms before the November deadline.
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The logo of the Indonesia Stock Exchange (IDX) is seen at the IDX building in Jakarta on April 19, 2026. (JP/Iqro Rinaldi)
T
he sigh of relief on Wednesday morning after New York-based index provider MSCI decided not to downgrade Indonesia in its stock market categorization, at least until November, was short-lived.
Traders welcomed the announcement that the country would retain its emerging market status, as a downgrade to frontier market would have prompted another sudden sell-off by foreign investors, because Jakarta-listed stocks would then have been eliminated from portfolios around the world.
As a result, the Indonesia Composite Index (IDX) rose after the open while most stock markets of the region were down following declines on Wall Street.
But the mood quickly soured as more investors read beyond the headlines to realize that MSCI’s assessment was no stamp of approval. All it did was to buy Indonesian stock market authorities some time to clean up their act.
That means they have not yet fulfilled the requirements to keep Indonesian stocks in the good graces of the index compiler, even though they had promised to do so promptly when they were first put on notice, back in January.
The initial reaction at the time was commendable. Instead of making excuses, as is the case so often, officials from the IDX and the Financial Services Authority (OJK) immediately admitted there was need for reforms and greater transparency. They said all the right things about transparency and accountability and replaced some heads to underline their commitment to change.
Jakarta even went beyond the explicit requirements from MSCI with its promise to increase the minimum free float in listed stocks to 15 percent. However, the actual reforms have yet to be completed, with transparency being the key underlying issue.
