MSCI has reiterated its concerns regarding the transparency of Indonesia's stock market, which it believes undermines international investors' ability to accurately assess company valuations. The index provider pointed to opaque shareholding structures and signs of coordinated trading as significant issues that affect price formation and free float assessments.
Following these warnings, the Jakarta Composite Index has struggled, losing nearly 30% year-to-date. MSCI's annual Global Market Accessibility Review downgraded Indonesia's Information Flow assessment, echoing earlier concerns from January about the potential for the country to be downgraded from emerging-market status.
The report coincides with the Indonesian rupiah hitting a record low against the dollar and ongoing worries about the nation's fiscal health and capital outflows. In response to these economic pressures, Bank Indonesia recently raised interest rates unexpectedly.
MSCI emphasized that the lack of transparency materially limits the ability of institutional investors to construct portfolios and replicate indices based on reliable market prices