A WARNING from MSCI that it may exclude Indonesia from its stock market indexes — benchmarks used by global financial investors — risks cutting the nation off from international capital and relegating it to an investment backwater.
MSCI stunned investors by proposing that it remove Indonesia from its global stock indexes altogether, months after floating a less severe downgrade from emerging market to frontier over opaque ownership and securities trading practices.
A cut to standalone status would be unusually harsh and rare: Argentina was dropped in 2021 for imposing capital controls, and Russia in 2022 after Western sanctions cut it off from global finance over its invasion of Ukraine.
Indonesia would find itself in a small group of standalone markets that includes Lebanon and Zimbabwe.
