Indonesia Avoids MSCI Downgrade in Much-Needed Win
By Ying Xian Wong and Fabiana Negrin Ochoa
Indonesia has held on to its emerging-market status, avoiding being downgraded by index provider MSCI in what will be a welcome decision for a country grappling with a loss of investor confidence.
The move averts what analysts had warned could be a multibillion-dollar outflow of capital from Indonesia.
Worries about transparency and policymaking have hammered Indonesian assets this year, sparking a series of warnings from credit-rating agencies, MSCI and fellow index provider FTSE Russell.
Headwinds stemming from the Iran crisis have made matters worse, hitting the oil-sensitive rupiah and raising fiscal risks as government subsidies swell.
The rupiah is Asia's worst-performing major currency so far this year, while its stock market has been the region's weakest.
"Staying in the emerging-market index will keep Indonesian stocks in global investment mandates, preventing a further wave of foreign capital outflows and providing a much-needed confidence boost," Gavekal Research analysts Tom Miller and Udith Sikand said ahead of the decision.
However, absent a drastic shift in policymaking in a more investor-friendly direction, analysts doubt that Southeast Asia's largest economy can regain its status in the eyes of foreign-market participants.
Write to Ying Xian Wong at ying.xianwong@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
June 23, 2026 18:37 ET (22:37 GMT)
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