IDX pledges to defend emerging market status amid downgrade risks

Jakarta (ANTARA) - The Indonesia Stock Exchange (IDX) committed to defending its "emerging market" status after two major global index providers placed the country on separate watchlists for a potential downgrade to a frontier market.

"We will do our best to ensure that Indonesia, and the Indonesia Stock Exchange, remains a prominent emerging market, with various measures in place," IDX Director of Trading and Member Regulation Irvan Susandy stated on Wednesday.

S&P Dow Jones Indices placed Indonesia on its watchlist on Wednesday morning, citing concerns over market transparency. This followed a similar move by MSCI on June 24, which acknowledged Indonesia's recent capital market reforms but emphasized the need for consistent policy implementation.

MSCI warned that if adequate progress is not demonstrated by its November 2026 Index Review, it will consider options including a formal consultation on reclassifying Indonesia from an emerging market to a frontier market.

A downgrade to a frontier market could trigger massive capital flight, as many international index-tracking funds are legally barred from investing outside of designated emerging markets.

Despite these warnings, the IDX remains confident in the fundamental growth of the local capital market, particularly regarding market capitalization and average daily transaction value (RNTH).

"Because our RNTH has reached $2 billion in transactions per day, or Rp34 trillion per day, we have been there. I am confident that our potential is there," Irvan remarked.

He confirmed that Indonesian capital market authorities are actively making improvements to address the issues raised by the global index providers, with a primary focus on enhancing transparency.

Irvan urged investors to remain confident in the long-term, sustainable management of the local exchange, adding that authorities view the feedback from global index providers positively as a basis for regulatory improvements.

Translator: Muhammad Heriyanto, Yashinta Difa

Editor: Aditya Eko Sigit Wicaksono

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