“We don’t think Indonesia will be downgraded to frontier market and it will stay in the emerging-market category,” said Henry Wibowo, a former JPMorgan & Chase Co strategist who co-founded Alphagate Capital in Jakarta. “That being said, we are expecting down weight for Indonesia within the MSCI EM bucket, as we expect some names to be excluded in the May rebalancing, especially those mentioned in the concentration list.”
A spokesperson at MSCI did not immediately respond to calls and emails seeking comments.
Concern about an MSCI downgrade has seen the nation’s key index slide about 20% this year, even as regulators have raised free-float requirements and asked for more shareholding disclosures. The key challenge is a market dominated by family-owned conglomerates that operate dozens of listed and private entities from mining and tobacco to petrochemicals, with control typically maintained through relatives and related parties.
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The Indonesia Stock Exchange last Thursday announced the names of nine companies with shareholding concentrations of more than 95%, and a promise that it would make such disclosures regularly. They included PT Barito Renewables Energy and PT Dian Swastatika Sentosa, with their stocks then plunging as much as 14% each on Monday.
Telecommunications infrastructure builder PT Solusi Tunas Pratama, controlled by Djarum Group heirs Martin Hartono and Victor Hartono, announced plans on Monday to delist as it struggles to meet a new free-float threshold.
The top 20 largest tycoon-linked companies on the Jakarta Composite Index make up nearly 43% of its weighting, including PT Bank Central Asia and PT Bayan Resources, according to PT Trimegah Sekuritas Indonesia data from June 2025. They also make up about half of the MSCI Indonesia Index.
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The stock exchange last week also issued a regulation that requires listed companies to increase shares available for public trading to 15%, giving firms up to three years to achieve the level.
“We believe this reform is positive and good for the medium- to longer-term outlook,” Ferry Wong, a strategist at Citigroup in Jakarta, wrote in a client note this month. “That said, the May 2026 MSCI semi-annual index review may still bring about selective exclusions or weight reductions for stocks flagged with high concentration and effectively lower the free float.”
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