Jakarta (ANTARA) - Deputy Coordinating Minister for Economic Affairs Drajad Hari Wibowo has urged investors not to panic over Morgan Stanley Capital International (MSCI)'s announcement regarding a proposed downgrade of Indonesia's stock market classification.
He encouraged investors to conduct their own analysis before making investment decisions in the Indonesian stock market.
"One thing I want to tell domestic investors is to do your own calculations. MSCI has a strong reputation, and we need to pay attention to what it says. But I want to make one point: MSCI is not always right," Wibowo said in Jakarta on Friday.
He said MSCI's reputation as a global index provider should be taken seriously. However, its recommendations do not always deliver better investment returns than other indexes.
He cited an analysis by Deutsche Börse showing that while Germany's DAX stock index recorded strong gains, the MSCI World Index posted negative performance.
"What does that mean? It means that not everything MSCI does is beneficial to investors," he said.
Wibowo believes that various simulations have shown that returns from MSCI indexes can be lower than those from alternative indexes.
He also said investors should consider the heavy weighting of US stocks in the MSCI World Index when assessing its performance.
"There is an American bias in the index. In other words, US stocks have too much weight," he said.
Nevertheless, Wibowo said the government would continue capital market reforms to improve governance and address issues raised by MSCI.
The reforms would proceed regardless of MSCI's decision on Indonesia's stock market classification.
"Some of the points raised by MSCI are good and are measures the government needs to take. The government will continue its capital market reforms, regardless of MSCI's decision. I simply want to educate investors and capital market participants: do your own calculations," he said.
He expressed hope that investors would better understand Indonesia's capital market conditions and avoid making investment decisions based solely on sentiment surrounding global index providers.
The Jakarta Composite Index (JCI) fell 469.86 points, or 8.01 percent, to 5,393.92 on Friday morning, prompting a temporary suspension of stock trading, known as a trading halt.
MSCI has opened a consultation with market participants on a proposal to reclassify Indonesia's stock market from Emerging Market to Standalone Market status.
MSCI has set April 30, 2027, as the deadline for receiving feedback and is scheduled to announce its decision by June 30, 2027.
The index provider said it would proceed with the proposed reclassification unless it received clear evidence of substantial improvements in Indonesia's market governance and functioning.
Since January 2026, MSCI has frozen some changes to Indonesian stock indexes amid investor concerns over the transparency of share ownership structures and suspected coordinated trading.
The Financial Services Authority (OJK) and the Indonesia Stock Exchange (IDX) have previously announced several reform measures.
These include greater disclosure of share ownership and a roadmap to raise the minimum public shareholding, or free float, requirement to 15 percent.
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Translator: Bayu Saputra, Katriana
Editor: Azis Kurmala
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