MSCI Inc has once again decided to postpone its assessment of Indonesian equities, stating that more time is needed to observe whether recently announced transparency reforms are proving effective.

The index provider noted that Indonesia's initiatives to strengthen information disclosure, refine investor classifications, and raise the minimum free-float ratio to 15% represent steps in the right direction. However, in a statement issued on Tuesday, the firm pointed out that what matters for global investors is whether these measures can be consistently and effectively implemented, creating a lasting impact within the market.

The statement indicated, "Should insufficient progress be made by the November 2026 MSCI Index Review, MSCI will consider a range of options for appropriate treatment of the Indonesian market, which may include consultations on reclassifying Indonesia from Emerging Markets to Frontier Markets."

This decision prolongs investor anxiety that has persisted for months. MSCI had issued a warning in January, suggesting a potential downgrade of Indonesia's market status to Frontier due to investability concerns and a limited supply of publicly tradable shares. That warning triggered a sharp market sell-off and prompted regulators to roll out a series of capital market reforms.

Tuesday's latest announcement comes after a previous deferral, as MSCI had stated it was reviewing the effectiveness of new data sources and regulatory measures on free float and investability.

Last week, as part of its annual market accessibility review, MSCI downgraded Indonesia's rating on "information flow" to negative. This was attributed to the country's limited transparency on shareholding structures, coordinated trading practices that undermine price formation, and a lack of English-language corporate disclosures. This action followed the removal of several stocks with highly concentrated ownership from its indexes last month.

A decision by MSCI to maintain Indonesia's Emerging Market status could help stem foreign capital outflows, alleviate pressure on the depreciating rupiah, and support President Prabowo Subianto's efforts to revive economic growth. The rupiah has repeatedly hit lows against the U.S. dollar this year, declining over 6% to become one of the worst-performing emerging market currencies. Foreign investors have also sold $4 billion worth of stocks, with the benchmark equity index falling approximately 30%.

Investors are also awaiting an assessment outcome from FTSE Russell. That index provider stated last month it would delay the re-ranking of the Indonesian stock market, including adjustments to free-float and the addition of new stocks, until at least after its September review to allow for more in-depth monitoring.