As public sentiment sours, Indonesia awaits MSCI verdict which risks $13 billion in capital outflows

The day of reckoning for Indonesia’s stock market is here. MSCI, the global benchmark provider, will determine whether to downgrade Southeast Asia’s largest economy to “frontier market” status, or keep it as an emerging market, on June 23. If MSCI downgrades Indonesia, as much as $13 billion could flow out of the country, as calculated by Goldman Sachs. “If MSCI confirms a downgrade, index funds would sell Indonesian holdings automatically,” Achmad Sukarsono, associate director at consultancy Control Risks, tells Fortune. “No committee needs to make a grand judgment, as the rules do the selling.” The fallout won’t stop there. “A downgrade is a loud signal to everyone else that something is wrong,” says Josh Kurlantzick, a senior fellow for South and Southeast Asia at the Council on Foreign Relations (CFR), a New York City-based think tank. “Fund managers who actively choose where to invest would likely back away from Indonesia too.” MSCI first raised concerns over Indonesia’s investability in late January, pointing to opacity in ownership data and market activity. It also announced an interim freeze on index adjustments for Indonesian securities. (Other MSCI frontier markets include Bangladesh, Pakistan, and Vietnam.) This triggered a massive sell-off of Indonesian stocks. Foreign investors have pulled $3.4 billion out of the Jakarta stock exchange since the start of 2026. The country’s stock market is now one of the world’s worst-performing, with the Jakarta Composite Index falling over 28% in 2026 thus far. Long-drawn issue MSCI designated Indonesia an emerging market in 1989, following a series of major financial reforms that opened its stock market to foreign investors. Indonesia has long attracted investors due to its bounty of natural resources and its large and growing population. “Indonesia still has scale, demographics, strategic minerals, a large domestic market, and a political class that understands growth,” says Sukarsono. “The problem is co