Lai Eu Roy, head of investment at Eastspring Al-Wara Investment, said investors are closely watching MSCI’s proposed reclassification of Indonesia’s equity market. He spoke on Thursday (22/10) at the Permata Bank Wealth Wisdom 2026 event in Jakarta. The move could affect passive and benchmark-linked investment flows.
MSCI is consulting on moving Indonesia from emerging market to standalone market status. The proposal is not a final MSCI decision. Lai said an update from MSCI is expected around January of the following year.
Concerns over ownership and enforcement
MSCI raised concerns earlier about share ownership opacity, alleged insider trading and enforcement. Those concerns form the backdrop to the consultation. Lai said he expects the impact to be large.
“We have invested in Indonesia for many years,” Lai said. “I think what is happening now can be described as unprecedented.”
Benchmark exposure at stake
“Of course, the impact is very large, because many investors, including us, use the MSCI index as a benchmark,” Lai said.
Josua Pardede, an economist at Bank Permata, said the process still gives authorities and market players room to act. He pointed to share price moves on the preceding Friday and Monday as a reaction to the MSCI developments.
“The process still gives authorities and market players the opportunity to strengthen transparency of share ownership, improve governance quality, and improve the structure of the domestic capital market,” Pardede said.
Related: GIC and Temasek deny pressuring MSCI over Indonesia downgrade · MSCI weighs downgrading Indonesia to standalone market status
Source: MSCI
