MSCI has maintained Indonesia's status as an emerging market country based on the results of the August 2026 Index Review announced on Wednesday, 12 August, local time. Based on the results of the 2026 Annual Country Review for the MSCI Frontier Emerging Markets Index, MSCI made no changes to the list of countries in the index. Indonesia's status remains as an emerging market. 

"There will be no changes to the list of emerging markets currently included in the MSCI Frontier Emerging Markets Index as a result of this review," MSCI stated in an announcement on Thursday, 13, August. 

The MSCI Frontier Emerging Markets Index is an index that combines all country indexes in the MSCI Frontier Markets Index with selected country indexes from the MSCI Emerging Markets Index. MSCI reviews the Emerging Market status of countries included in the index every year. 

Currently, countries classified as Emerging Markets by MSCI include Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Greece, Hungary, India, Indonesia, South Korea, Kuwait, Malaysia, Mexico, Peru, the Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates. Nevertheless, MSCI continues to freeze the Indonesian stock exchange pending improvements in market accessibility and transparency aspects. 

MSCI Drops 10 Indonesian Stocks 

On the other hand, MSCI removed up to 10 Indonesian stocks in its announcement, effective after the close of trading on August 31, 2026. From the prestigious MSCI Global Standard Indexes, PT GoTo Gojek Tokopedia Tbk (GOTO) was removed. Meanwhile, PT Charoen Pokphand Indonesia Tbk (CPIN) was downgraded from the MSCI Global Standard Indexes to the MSCI Global Small Cap Indexes. 

MSCI also dropped nine stocks from the MSCI Global Small Cap Indexes: PT Bank Jago Tbk (ARTO), PT Bukalapak.com Tbk (BUKA), PT ESSA Industries Indonesia Tbk (ESSA), PT MD Entertainment Tbk (FILM), and PT Medikaloka Hermina Tbk (HEAL). Additionally, PT MNC Tourism Indonesia Tbk (KPIG), PT Raharja Energi Cepu Tbk (RATU), PT Semen Indonesia (Persero) Tbk (SMGR), and PT Transcoal Pacific Tbk (TCPI) were removed from the MSCI Global Small Cap Indexes. 

These decisions will take effect after the close of trading on August 31, 2026, with an effective date of September 1, 2026. Furthermore, MSCI will announce the results of the November 2026 Index Review on November 11, 2026, which will take effect on December 1, 2026. 

"All changes will take effect as of the close of August 31, 2026. Effective date: September 1, 2026," MSCI wrote in its announcement on Thursday 13 August. 

The Financial Services Authority (OJK) previously expressed hope that MSCI would soon lift the freeze on Indonesian stocks during the next rebalancing. Lifting the policy is considered vital to reopening opportunities for Indonesian stocks to enter the MSCI index. OJK also predicts that the impact of this period's rebalancing will be lighter than the previous one. 

Hasan Fawzi, Chief Executive of Capital Market, Derivative Finance, and Carbon Exchange Supervision at the Financial Services Authority (OJK), said that the Indonesia Stock Exchange (IDX) and OJK have implemented various improvements to enhance transparency in Indonesia's capital market. According to him, these improvements should be considered by MSCI when evaluating the freeze policy. 

"We hope that they will fairly assess and compare our market's level of transparency. In fact, we feel it is already far better than other markets," Hasan said after attending the 2026 Indonesian Issuers Association Member Meeting in Jakarta on Tuesday, 11 August. 

Hasan hopes that the transparency improvements carried out by the exchange authorities can serve as the basis for MSCI to grant relief or lift the freeze. That way, potential Indonesian stocks can once again be evaluated for inclusion in the MSCI index. 

Hasan stated that the impact of the rebalancing in August 2026 is estimated not to be as large as the major rebalancing in May, which had an impact in June. Based on OJK and IDX calculations, Indonesian stocks that remain in the MSCI index are still considered worthy of being retained. 

"Even if some exit, based on our temporary calculations, it will not be as large or more significant compared to the rebalancing decision made in May," he said. 

According to him, the depth of exchange transactions as well as the role of active and domestic investors, including retail investors, help the market remain resilient against such pressures. Hasan hopes a similar dynamic will recur for the August rebalancing, estimating that the impact will not be overly significant and that the market still possesses the resilience to withstand it. 

Hasan even sees an opportunity emerging if MSCI lifts the freeze policy that has been in place since its announcement in January. According to him, investors should have already priced in the risks of that policy; therefore, lifting the freeze actually has the potential to become a positive catalyst for the Indonesian stock market. 

"We hope the upside will come when the freeze is lifted," Hasan said. 

This article is published in partnership with Katadata 

Original article here