FTSE Keeps Indonesia in Secondary Emerging Market Tier, Delays Index Changes
Key Facts
FTSE Russell kept Indonesia in the secondary emerging market category in its annual review, announced on October 6, 2026, and did not place it on the watch list, IDNFinancials reported, citing the index provider. The decision concerns the market classification, while the technical treatment of Indonesian securities in FTSE indexes remains a separate matter. The provider postponed changes to the rebalancing of Indonesian equity indexes in its March, June and September 2026 reviews. Indonesia’s continued inclusion in the emerging market category therefore did not mean that all deferred changes to index constituents had resumed. FTSE Russell said it would continue to assess reforms and monitor market developments before making further decisions on Indonesian stocks.
The reforms under review focus on providing clearer shareholder information, increasing the detail of investor data, raising the minimum free float and strengthening market surveillance functions, IDNFinancials reported, citing FTSE Russell. These steps address ownership disclosure and the availability of shares for trading, as well as the ability of relevant authorities to monitor market activity. FTSE said monitoring the effectiveness of the reforms was part of its assessment, not merely an annual classification announcement. In its September review, the provider proceeded with some index updates for Indonesian securities but postponed additions to indexes, free-float increases and changes to size bands. This means that the continuation of some updates did not end the suspension of those specific changes.
FTSE Russell described its September approach as allowing more time to monitor developments and assess the effectiveness of measures, while supporting an orderly return to regular review processes. This followed the postponement of rebalancing changes in three reviews during 2026—March, June and September—IDNFinancials reported, citing the provider. The treatment distinguishes keeping the country in the emerging market category from implementing changes to index constituents and their weights. FTSE said it would continue to monitor market developments and engage with participants before the next review. It also left open the possibility of resuming full reclassification among the decisions it could consider before that review.
FTSE’s monitoring of Indonesia comes amid separate classification pressure from MSCI, which had kept the country in the emerging market category but proposed consulting on moving it to standalone market status. Reuters quoted MSCI as saying that “significant concerns remain over market irregularities.” The concerns, according to information reported about MSCI, relate to weak ownership transparency and trading behavior. The index provider said it would consult market participants on a downgrade through April 2027. It added that it would proceed with reclassification unless it saw clear evidence of improvements in market governance and performance.
The severity of the issue became evident in the October 16 session, when Indonesia’s benchmark index fell 11.57%, its biggest daily drop since January 1998, according to Reuters via Investing.com. The decline followed the announcement that MSCI had begun consultations on reclassifying the market as a standalone market. An Associated Press report said MSCI’s warning of a possible downgrade shook investors and contributed to a sharp sell-off over the previous two trading sessions. MSCI said it would continue to monitor market developments and engage with participants and authorities. The consultation process remains separate from FTSE’s decision on Indonesia’s classification and the treatment of its stocks in indexes.
Among the dates preceding the next review is the Federal Reserve meeting scheduled for October 27 and 28, with its chair due to hold a press conference on October 28, according to the U.S. central bank’s calendar. In the context of energy prices, Pilarmas Investindo said their rise had revived inflation concerns and strengthened expectations that interest rates would remain high, weighing on riskier assets. The company also said higher energy costs could increase Indonesia’s budget spending on energy subsidies and compensation because the country is a net oil importer. The statements did not specify an oil price level for the October 27 session. Before the December index review, FTSE said it would announce its position on Indonesian stocks again, after monitoring reforms and gathering views from market participants.