The Indonesia Stock Exchange (IDX) has pledged to safeguard the country’s position as an emerging market after two major global index providers placed Indonesia under review for a possible downgrade to frontier market status, raising concerns over potential capital outflows.
IDX Director of Trading and Member Regulation Irvan Susandy said the exchange remains committed to maintaining Indonesia’s standing in global equity indices by addressing issues highlighted by international index providers.
“We will do our best to ensure that Indonesia, and the Indonesia Stock Exchange, remains a prominent emerging market, with various measures in place,” he said on Wednesday.
The latest development follows a decision by S&P Dow Jones Indices to place Indonesia on its watchlist over concerns related to market transparency. The move came shortly after MSCI, one of the world’s largest index providers, placed Indonesia under review on June 24.
While MSCI acknowledged recent reforms undertaken by Indonesia’s capital market authorities, it said sustained implementation of those measures would be crucial before any decision is made. The index provider warned that if sufficient progress is not demonstrated by its November 2026 Index Review, it could initiate a formal consultation on reclassifying Indonesia from an emerging market to a frontier market.
A downgrade would carry significant implications for Indonesia’s financial markets, as many global institutional investors and index-tracking funds are mandated to invest only in emerging market securities. Reclassification could therefore trigger sizeable foreign fund outflows and reduce Indonesia’s weighting in global investment portfolios.
Despite the heightened scrutiny, the IDX remains optimistic about the country’s long-term market fundamentals.
