Antara News·Indonesia·Thursday, October 29, 2026 at 05:36 PM UTC

Indonesia sees short-lived impact from MSCI proposal, BI says

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Rizka Khaerunnisa, Kuntum Khaira Riswan

Jakarta (ANTARA) - The impact of MSCI's proposal to reclassify Indonesia's stock market, which triggered recent capital outflows, is likely to be short-lived, Bank Indonesia (BI) Governor Destry Damayanti said on Thursday.

Speaking at the Kadin National Leadership Meeting in Jakarta, Damayanti said efforts by market regulators to improve governance could help restore foreign investor confidence over the long term.

"I am confident that we have significant opportunities in the long term. We see the impact of MSCI's announcement as a short-term shock. And we hope that once the issues of concern have been addressed, investor sentiment will be able to recover," she said.

Damayanti noted that Indonesia's economic fundamentals remain strong, providing substantial potential to attract sustained foreign investment.

She said the MSCI announcement could serve as an impetus for stakeholders to accelerate capital market reforms, particularly in transparency, governance, and regulation, to address investor concerns.

The central bank governor noted that the Financial Services Authority (OJK) has taken steps to improve market operations, expressing confidence that these measures will bolster investor trust.

Damayanti added that OJK's swift response to the MSCI proposal, alongside coordination within the Financial System Stability Committee (KSSK), will help maintain global investor confidence in Indonesia's economic outlook.

MSCI has opened consultations with market participants on a proposal to downgrade Indonesia's market classification from emerging market to standalone market.

The index provider said it will announce a final decision by late June 2027 while providing periodic updates during the consultation process.

MSCI noted that market participant concerns have risen regarding the investability of Indonesia's stock market, citing ongoing uncertainty over share ownership structures and alleged coordinated trading activity.

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